Toward the end of 2004, the Israeli diamond business community was very much of two minds on how the year would close. On the one hand, it looked with satisfaction at the fact that by the end of November it had broken the US$ 6 billion barrier in net exports of polished diamonds. The official press releases issued by the industry’s umbrella organisation, the Israel Diamond Institute, oozed with optimism, pointing to the 16 per cent rise in value in exports during the first eleven months.

However, a close look at the other three import and export categories that are reported on a monthly basis by the Diamond Controller’s office made other analysts more cautious as to the long-term health of Israel’s diamond industry and trade. If the rough diamond import and export figures are indicative of a trend, they felt, it is that Israel is becoming a trading hub for rough diamonds.

Rough imports in the January-November 2004 period approached 26 million carats, representing a 53 per cent increase over the same period in 2003. In terms of value, the rise was a less drastic but still dramatic 36 per cent. The price per carat of rough diamonds imported was US$ 244 per carat.

During the same 11-month period, rough exports grew 96 per cent to almost 28 million carats, with a value of US$ 4.72 million. Effectively, Israel exported nearly two million carats more than it imported.

The polished diamond sector was less active. Both in September and October, polished imports decreased 12 per cent in value. In November, polished imports fell about six per cent in weight and four per cent in value. However, the fall in imports was not sharp enough to offset the rise in imports earlier in the year. In the January-November period, polished imports rose a modest 3.7 per cent in weight and 5.8 per cent in value to US$ 3.14 billion.

More disturbing to the Israeli sector was news that LID Ltd., Israel’s third largest diamond exporter, would be relocating its headquarters from Ramat Gan to India. LID, which was originally created by the country’s most powerful diamantaire, Lev Leviev, and his brother-in-law David Elishayov, is today jointly owned by the Elishayov and Meirov families. The company, which once was a DTC sightholder but lost its allocation during the 1990s, regained its sightholder status almost two years ago, but only after Leviev had split off to form his own company, LLD Ltd.

According to the Haaretz daily, Elishayov has already transferred manufacturing operations abroad and is planning to dismiss local employees. The newspaper reported that Elishayov had purchased an executive jet so that his managers can return home to Israel on the weekends and holidays. Haaretz also reported that the Meirov family is expected to leave the partnership as part of the reorganisation.

The LID announcement was received with disappointment by Motti Ganz, president of the Israel Manufacturers Association (IsDMA). Ganz stated he regretted the move, but also added that it is the company’s right to make its own business decisions.