When inspecting the quality of diamonds, it is widely acknowledged to be aware of four key characteristics: cut, clarity, colour, and carat. In becoming a global centre, there are another three Cs that have played an equally important role in Dubai’s meteoric growth and resilience in the sector: community, collaboration, and climate.
As a result, the UAE is not only the official rough diamond capital of the world, but the largest, and fastest growing hub, having increased its polished trade by 52.5 per cent and its H1-2022 gross trade to $19.8 billion - a year-on-year increase of 24.7 per cent. Almost 20 years since DMCC began its journey into the diamond industry, I look back at how we have evolved and what gives Dubai its appeal in a sector that was once upon a time non-existent.
In the early 2000s, Dubai was neither a producer nor a known destination for diamonds. It was at the beginning of a long-term strategy that would see its relevance steadily increase across a range of commodities, with diamonds strategically positioned at the heart of them. By acknowledging the challenges faced by the global industry and providing consolidated solutions under one jurisdiction, Dubai has achieved more in 20 years than many of its competitors in a century, starting with community.
Having established the Dubai Diamond Exchange in 2002, a combination of factors, including the emirate’s increasing popularity as a holiday destination, its growing expat population and DMCC’s tailored business environment helped to enhance its position as a centre for trade and within just ten years, had grown its trade value to over $12.6 billion and $11.4 billion in polished and rough diamonds respectively.
In addition to building a successful bourse, the inclusion of various key organisations as part of the DMCC community cannot be understated.
Bring in the biggest names
As part of the fifth Dubai Diamond Conference, which involved the participation of over 550 industry leaders to discuss 'The Future of Diamonds', the inaugural JGT Dubai and the President's meeting for the World Federation of Diamond Bourses (WFDB) allowed stakeholders the opportunity to see how and why DMCC's ecosystem in the Almas Tower was designed for maximum efficiency between stakeholders. And retaining all the essential facilities and services required to support both security and logistics.
While there are too many to list, other key organisations of note to join our community include HRD Antwerp, Europe’s leading authority in diamond certification, IGI, a global leader in jewellery assessment, and the addition of the Dubai Design Academy, whose jewellery design courses are helping to support a new generation of local creatives achieve their dreams, while supporting the industry’s downstream capacity.
I am pleased to confirm that amongst our tenants will be the GIA, whose new lab (registered under GIA Laboratory DMCC) will occupy more than 41,000 square feet across two floors of the Uptown Tower for a minimum lease of 10 years.
Tom Moses, GIA Executive Vice-President and Chief Laboratory and Research Officer, said, "The growing importance of Dubai as a diamond centre and its outstanding infrastructure make the DMCC an excellent choice for a significant expansion of GIA's capacity. Dubai's close proximity to the important diamond manufacturing and producing centres, in addition to efficient transportation links to global diamond markets, will help support our clients and, very importantly, extend our important consumer protection mission."
While hosting some of the most influential members of the global diamond community has provided a lot of support, our direct collaboration has also helped cement Dubai's position by providing a seat at the table or the right circumstances for our community to thrive. Whether from the World Diamond Council appointing myself and my colleague, Dr. Martin Leake, Special Advisor – Precious Stones, as ambassadors of the World Diamond Council’s System of Warranties initiative, through to our work with Brinks to design, develop and build the Middle East’s largest private vault, each step has helped to serve and or support our stakeholders, while upholding the highest level of international standards.
A VAT benefit
Arguably the two largest collaborative steps taken that have provided the most significant impact were our work with the Ministry of Finance to support the UAE Cabinet’s decision to introduce a reverse charge mechanism for VAT, which was applied to gold, diamonds, and precious metals. Without this decision; there would be no gold or diamond industry in Dubai. Period.
The second and more recent landmark collaboration came shortly after the signing of the Abraham Accords, which saw reciprocal offices opened in Tel Aviv and Dubai, with the Israel Diamond Exchange opening its representative office at the Dubai Diamond Exchange during the opening of the Dubai Diamond Conference. As a result, both countries have been able to enjoy greater ease of doing business while providing a more convenient location for trade, being within just a short distance of the diamond-producing regions of continental Africa and Russia, as well as other important consumer and manufacturing markets such as India.
Connect all diamond hubs
Regarding climate, Dubai has been fortunate in every sense of the word. Through a combination of high living standards, low crime rates and temperate weather, DMCC has become a multicultural hub, which is not only highly connected with direct flights to other diamond centres such as Tel Aviv and Surat but also where business owners from all countries are welcome equally to conduct their business in what is one of the safest environments of its kind.
In addition, the emirate has also been able to move with the climate of change towards the growing, ethical trend of lab-grown diamonds. With demand set to increase at 20 per cent year-on-year, Dubai is again well positioned to capitalise on this $4 billion market.
However, more work still needs to be done by Dubai Electricity and Water Authority (DEWA) regarding the sector's two critical factors, energy allocation and cost. For the time being, both Abu Dhabi and Fujairah have been able to supply both readily, and while Dubai's primary role will remain one of trade as opposed to manufacturing, I hope that either DEWA can find a way to meet demand in a competitive manner, or for the inevitable onset of renewable energy, with the support of battery storage to provide an optimised solution.
Emeralds and rubies too
While not diamond specific, Dubai's climate has also helped to stimulate the growth of other similar sectors, most recently coloured stones, where it has already successfully hosted auctions from the second biggest emerald mine in the world through to the sale of the record-breaking 8,400-carat rough ruby in April this year. Looking ahead, DMCC is also proud to host the World Sapphire Auction towards the end of November.
With the landscape of trade set to become increasingly competitive, the UAE has already signed a closer economic partnership arrangement with India in 2022 and aims to sign a further 35 similar agreements to double the economy and boost trade and foreign direct investment in the near future.
In addition to its current status as one of the top global commodity trading hubs, based on locational and trading partner factors, commodity endowment factors and institutional factors, DMCC's agility to move with demand while catering to each aspect of this highly dynamic industry will mean we are not only here for the long run, but will continue to play a more significant role in responsibly developing the industry for a brighter, flawless future.