When Feriel Zerouki completed her university, she made her entry into the diamond industry. She was very lucky that a company called the Diamond Trading Company (DTC) needed an analyst, precisely a mathematician, who would be able to develop models for probabilities: De Beers needed to provide sightholders with three years forecasting of what production they would get to enable them to sustainably manage their business.
Unlike lab grown diamonds, natural diamond production is determined by mining output, hence the need to forecast production to help sightholders manage their businesses. “That is what gave me the opportunity to join the diamond industry,” Zerouki says in an exclusive interview on the sidelines of the JCK Diamond Jewellery Show held in Las Vegas, USA last week.
It was in 2005 when she started at the bottom as a supply chain analyst, then worked on the rough diamond pricing, which was basically numerical analytics. “Although I studied mathematics, I am the type of person who likes interacting with people,” she says about herself. “Suddenly there was an opportunity at the Ethics Department, and I applied. I studied very hard and finally got that job.”
Up the ladder
Zerouki moved up the ladder until she became the leader in the department. Another opportunity for the department dealing with Government Relations opened but she was already giving support to her predecessor, which naturally made her the successor. Her motto is that one must do the job that one wishes to be promoted to but, of course, also doing the job that one has been hired to do.
Her role was in time expanded to International Relations and she started engaging with the diamond industry bodies and the Kimberly Process. “I started learning about the Responsible Jewellery Council (RJC) in the United Kingdom and the World Diamond Council (WDC),”Zerouki explains. “It is very important to know what these bodies do to protect natural diamonds.”
Another growth opportunity arose for Zerouki when she was promoted into the De Beers Group President – Corporate Affairs. It was easy for her because she was already doing communications under international relations. Because of her dedication, passion and working closely with the diamond industry organisations aimed at protecting the natural diamond, she was elected President of the World Diamond Council (WDC), by all WDC members. Her leadership at the WDC means that important issues like the Kimberly Process are now her priority.
85 member countries
The Kimberley Process (KP) unites administrations, civil societies, and industry in reducing the flow of conflict diamonds – “rough diamonds used to finance wars against governments” – around the world. It has 85 member countries around the world. Significantly, 99.8 percent of members of the Kimberly Process are responsible for stemming 99.8 percent of the global production of the conflict diamonds.
Underpinned by a United Nations (UN) mandate and backed by leading civil institutions, KP observers include the WDC representing the diamond industry. As President of the WDC, Zerouki leads a global council that develops the rules for international trade in rough diamonds for the 85 countries that participate in the KP. It is guided by three pillars – the government, the industry, and civil society. Zerouki leads the industry pillar.
The WDC is an industry association dedicated to protecting the integrity of natural diamonds and their distribution chain. Created in 2000 to support international efforts to eliminate the trade of ‘conflict diamonds,’ that mission continues and has been expanded to ensure that all diamonds in the pipeline are handled in accordance with universal principles of human rights, labour rights, anti-corruption and anti-money laundering.
The WDC’s membership includes businesses and organisations from around the globe engaged in all sectors of the diamond industry and trade – from rough diamond producers to retail jewellers. According to Zerouki, the council has a commitment to protect the impact brought about by the natural diamonds on world economy.
JKC jewellery trade show
The discussions of the 2023 JCK jewellery trade show staged in the tourism city of Las Vegas in the USA were dominated by trends in natural and lab-grown diamonds, with most panelists stressing that while there is a surge in lab-grown diamonds, natural diamonds continue to dominate since their sentimental value is incomparable to the synthetics. Even so, it appears that the two streams of diamonds are at par with each other; always tussling for the attention of lucrative diamonds consumers.
Zerouki – who rose to the helm of WDC last month, becoming the first ever woman to lead the organisation – says natural diamonds should be protected at all costs. She describes natural diamonds as a miracle product of nature that makes a huge and sustainable socio-economic impact on the global economy.
While De Beers spends more than US200 million annually to market natural diamonds, Zerouki believes that more still needs to be done. Regarding whether synthetic diamonds are affecting the market share of natural diamonds, she holds that there are other factors that affect the natural diamond industry. “The market is still soft not because of the lab-grown diamonds but other fundamentals,” she says. “You should notice that the natural diamonds had a very strong market in 2021 and 2022 where people bought a lot of diamonds and now have stock. So, there is some kind of recalibration.” Further, she says in terms of desirability, available consumer data shows that natural diamonds are very strong.
She explains that 2021 was a year of recovery from a decline in consumer demand for natural diamond jewellery occasioned by the restrictions that followed the outbreak of COVID-19 in 2020. The pace of the global recovery was strongest in the early part of 2021 compared with a low base a year earlier, but this moderated in the second half of 2021 when the comparative base was higher. The US was the main driver of the growth throughout the year.
Conservative spending
Global demand for natural diamond jewellery in 2021 rose by an estimated 27 percent year-on-year and by 10 percent vs 2019 to reach an all-time high of US$87 billion. “The second reason is that there are socio-economic pressures,” says Zerouki. “People are concerned by the rise in inflation rates. So, consumer countries are at times conservative in spending their money.”
There is also an industry concern. Group 7 countries have not made a statement about the additional requirements for all natural diamonds entering them. “So the industry is concerned about these additional requirements and how they will affect the industry, which makes the industry a bit skeptical,” Zerouki points out. “The USA, which is among the G7, is the largest consumer. So when there is such skepticism there, the sentiment goes down.”
The Group of Seven (G7) nations have pledged to focus on keeping Russian diamonds out of the market while the UK will ban them completely in order to reduce the revenues that Russia receives from its export of diamonds. Following their meeting in Hiroshima, Japan earlier in May,
these countries announced, in a statement on a US government website, that they will continue to work closely together to restrict trade in and use of diamonds mined, processed or produced in Russia. They will also “engage with key partners with the aim of ensuring effective implementation of future coordinated restrictive measures, including through tracing technologies”.
Market anxiety
The G7 comprises Canada, France, Germany, Italy, Japan, the UK and the USA, as well as the European Union (EU). Many of them introduced their own measures after Russia invaded Ukraine on 24 February 2022. For instance, the US imposed sanctions on diamonds coming directly from Russia, but rough stones and diamonds cut and polished in places like India or Belgium technically remain legal. Further restrictions are expected but they are yet to be announced, which Zerrouki says creates market anxiety.
“There are, however, certain areas of the lower quality natural diamonds which are somehow impacted because the price is almost equal with those of lab grown diamonds,” she notes. “There is lots of lab-grown supply coming, which will drive prices down on the lab-grown. So the short-term impact will normalise because while the influx of lab-grown diamonds will drive their prices down, natural diamonds will remain stable.”
Regarding what De Beers is doing to drive demand for natural diamonds, Zerouki answers that De Beers will vigorously go after the Gen Z (younger consumers), adding that the younger consumers account for 18 percent of consumption of natural diamonds. The idea, she says, is to increase this to a higher percentage by re-aligning De Beers marketing strategy with the younger generation while also focusing on bringing the story of the social impact of the natural diamond to all consumers. “We want to tell the story of Namibia, Botswana, Canda and South Africa better,” she says. “We want the impact of the diamonds to be at the forefront of diamond trade.”
Cutting edge technology
De Beers has cutting-edge technology called Tracr for tracking the origin of a diamond, how it was mined and what is the impact story of the diamond. Because of this technology, Zerouki is confident that De Beers has no match when it comes to provenance of diamonds.
But diamonds face competition from other luxury products like travel and discretionary luxury products, especially branded products like handbags. Zerouki believes that these luxury products are advertising their products appealing to the brand value of such products. She emphasises that Botswana, which is the heartbeat of production of natural diamonds was elected to host the Secretariat of the Kimberly Process by consensus of all members. Not least for that reason, she adds, De Beers, will ensure that protection of natural diamonds will continue.
Zerouki says the KP has grown to a point where the critical organisation needs a proper Secretariat. “At the WDC, we are chairing the Committee of the Secretariat to ensure that the KP achieves the intended results,” she states, adding that WDC also provides financial support to the KP. It is expected the KP Secretariat will be inaugurated next year with producer countries and members of WDC as critical stakeholders in quest of selling natural diamonds, hence the WDC will be working closely with Kimberly Process (KP) to push story of provenance to saturation levels because it is integral to ensuring that only clean diamonds are in the market.
