Best Way to Ship Uncut Diamonds From Africa
- Thread starter ishiboy
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That sounds like a scam.
I work at a consulting firm (think big 4). This is not a scam I have seen the permits, site etc. Looking to learn some of the best practices in the industry, especially in terms of monetizing their assets and transporting them stateside. Any information on global price lists, price differentials or any relevant reports would be greatly appreciated!
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The best person around here to give you advise is probably Paul Slegers from Infinity. Hopefully someone will send him an email and he can post.
As an aside, I have a partner who decided about twenty years ago to buy a coffee plantation somewhere in Africa (sorry - I'm forgetful of the details). He moved to the country, spent many months/years and a significant amount of money planting and tending for his crops, and finally harvested a huge bounty of beans. Excited to finally sell and recoup his investment (and profits) he showed up at the warehouse the morning of the auction and found everything was gone. Not a single bean was left and nobody knew a thing about where they went.
My point is simple. This is Africa and the rules as we think of them don't really apply. Good luck.
As an aside, I have a partner who decided about twenty years ago to buy a coffee plantation somewhere in Africa (sorry - I'm forgetful of the details). He moved to the country, spent many months/years and a significant amount of money planting and tending for his crops, and finally harvested a huge bounty of beans. Excited to finally sell and recoup his investment (and profits) he showed up at the warehouse the morning of the auction and found everything was gone. Not a single bean was left and nobody knew a thing about where they went.
My point is simple. This is Africa and the rules as we think of them don't really apply. Good luck.
Christina...
Ideal_Rock
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I just thought that I would point out that the excellent advice above was posted by the owner of one of the largest online diamond vendors in the world. I'd consider his advice, he's been in the business for many many years.
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Ishiboy,
If I give you a tip, I count upon you also answering my next questions.
Freight is easy: Airfreight-valuables out (KLM probably most experienced) and you can Brink's or Malca-Amit take care of the import upon arrival.
Insurance, you arrange through a specialised broker, most probably with Lloyd's in London.
Now, for the questions:
- Who is sorting the product before the export?
- Does the miner have an office in the importing country, or is it exported to a potential buyer or brokering party?
- Why the desire to export to NY, with there only being a small specialized market in rough? Antwerp would be nearer and a better market.
Live long,
If I give you a tip, I count upon you also answering my next questions.
Freight is easy: Airfreight-valuables out (KLM probably most experienced) and you can Brink's or Malca-Amit take care of the import upon arrival.
Insurance, you arrange through a specialised broker, most probably with Lloyd's in London.
Now, for the questions:
- Who is sorting the product before the export?
- Does the miner have an office in the importing country, or is it exported to a potential buyer or brokering party?
- Why the desire to export to NY, with there only being a small specialized market in rough? Antwerp would be nearer and a better market.
Live long,
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I second the notion that this is a scam.
To answer your question about shipping, both of the companies you’re considering are reasonable outfits. Shipping is the least of your problems.
You seem to be assuming that your diamonds are ‘worth’ more in the US than they are in Africa. Why? This may be true, but it may not but it's far from a forgone conclulsion. I see Africans on a regular basis who show up here (I’m in Denver) with this very assumption. They’re surprised to learn that the hard part is in the selling, not in the buying. There’s nothing unique about diamonds here. Everything you can buy is this way. How and to whom are you planning on selling? That’s the trick. ANYONE who is prepared to buy a parcel of rough diamonds in a rational way and actually pay for them is also prepared to help with the shipping and import issues from anywhere in the world as needed. Whoever actually owns the stones, and this is likely NOT the same person as the folks you’re talking to, bloody well knows this. The issue is not whether they can sell their diamonds. They already know this and have done it many times. The issue is how to get more money. Put another way, it’s how to get more out of YOU than they can get out of the channel they already are using. I appreciate your objective is to help some people who need it and I wish you all the best at it but be aware that everyone in this chain, especially the ones you don’t see, is an experienced professional who has done it many times before. The Pigeon here is YOU.
To answer your question about shipping, both of the companies you’re considering are reasonable outfits. Shipping is the least of your problems.
You seem to be assuming that your diamonds are ‘worth’ more in the US than they are in Africa. Why? This may be true, but it may not but it's far from a forgone conclulsion. I see Africans on a regular basis who show up here (I’m in Denver) with this very assumption. They’re surprised to learn that the hard part is in the selling, not in the buying. There’s nothing unique about diamonds here. Everything you can buy is this way. How and to whom are you planning on selling? That’s the trick. ANYONE who is prepared to buy a parcel of rough diamonds in a rational way and actually pay for them is also prepared to help with the shipping and import issues from anywhere in the world as needed. Whoever actually owns the stones, and this is likely NOT the same person as the folks you’re talking to, bloody well knows this. The issue is not whether they can sell their diamonds. They already know this and have done it many times. The issue is how to get more money. Put another way, it’s how to get more out of YOU than they can get out of the channel they already are using. I appreciate your objective is to help some people who need it and I wish you all the best at it but be aware that everyone in this chain, especially the ones you don’t see, is an experienced professional who has done it many times before. The Pigeon here is YOU.
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So you're an amateur in New York, and you own a parcel of supposed diamonds that you know next to nothing about that you bought from some seller in Africa. You're now surfing a cut diamond consumer forum for 'industry best practice' on how to sell them? Yikes! You are WAY beyond industry norm already.ishiboy|1339803832|3217323 said:
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double post
Given that he said he works at a big consulting firm, I would venture the guess that all he is doing is providing advice. Along those lines, where he said "paid in full" I imagine that means HE was paid in full to consult, not that he made a payment for the diamonds... Maybe ishiboy can clarify which is the case.
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RE Best industry practices:
Each shipment out of SL must be accompanied by a uniquely numbered and validated KPCS certificate. This can only be issued by the established, legitimate government. Import can only be made into KPCS participant countries and each country has its own system of warranties and requirements; some far stricter than others.
For USA import one must follow the Clean Diamond Trade Act (2003) which was created to dovetail with the KPCS. As of 2008 there are new regulations; all rough imports must follow a formal process using a US CBP Entry Summary. At the time of import you will be required to file certificate copies with the U.S. Census Bureau and to maintain the hard copies on file for five years. Additionally the U.S. State Department will require the importer to final annual ARs (activity report) detailing import, export and stockpile information. You should expect other levels of scrutiny and inquiry, pursuant to the USA Patriot Act, which will vary in intensity depending on the company's history and origin-of-import. For a newcomer importing rough from Sierra Leone you can expect extreme rigidity.
RE Sierra Leone: Cup half empty version
If you have researched conflict diamonds or have seen the movie "Blood Diamond" you may know that SL, specifically, has a brutal past. The result of the UN and NGO efforts in the late 1990s and early 2000s cleaned things up considerably, especially in SL, but West Africa is a mess. I would be extremely wary of diamonds somehow entering SL from non-participant or expelled countries, and making their way into supply via this new, "legitimate" chain. And while greed is not exclusive to West Africa - dubious rough could pop up anywhere - you can expect a long list of manufacturers, suppliers and retailers who will choose not to do business with you, simply based on the origins of the rough.
RE Sierra Leone: Cup half full version
On the other hand, if the situation your partners bring to the table is improving the lives of workers in SL in a demonstratable way your "think tank" may be wise to suggest a Fair Trade approach (think Fair Trade coffee, sugar, etc.). In short, the idea would be to create a channel where proceeds from retail sales of the product travel back upstream to benefit the people who harvested the product. SL is certainly a candidate for this. It's the opposite of a boycott, which can hurt the very people it's supposed to help. The fair trade topic is increasingly discussed as social media creates platforms for demonstration. It would be costly, and you can expect serious challenges, but it could create consumer evangelism in the long run if done correctly. It's definitely the harder road.
Summary
With the above said, it might not surprise you that I agree with the others who are wary of this situation. Consider the following:
1. Export is easy for legitimate traders with proper documentation... Why do they need you?
2. NYC is not an efficient sales center for rough... Why travel farther and sell slower for less profit?
3. American suppliers and sellers resist West African rough... Why add that challenge to the above?
4. Companies with an Asian base will buy easier with less hurdles... Why not maximize turnover and profits in that avenue?
If I was their consultant - knowing only what I've read in this thread - I'd be inclined to offer this:
"Gentlemen and ladies, we thank you for your business. If you wish to maximize your opportunities and profits we suggest you export to nearby Antwerp. There, you'll find hungry customers with factories in China who pay 0% VAT on their rough diamond imports, have an established market with no resistance to your goods and the steepest projected consumer-demand in the world for years to come... If opportunities and profit are less important to you than beneficiation we can discuss other avenues such as Fair Trade."
That would demonstrate your company's integrity to them. It would also allow them to make the choice to continue with your involvement if entering the USA market is important to them for reasons other than growth and profitability.
I hope this is helpful.
Each shipment out of SL must be accompanied by a uniquely numbered and validated KPCS certificate. This can only be issued by the established, legitimate government. Import can only be made into KPCS participant countries and each country has its own system of warranties and requirements; some far stricter than others.
For USA import one must follow the Clean Diamond Trade Act (2003) which was created to dovetail with the KPCS. As of 2008 there are new regulations; all rough imports must follow a formal process using a US CBP Entry Summary. At the time of import you will be required to file certificate copies with the U.S. Census Bureau and to maintain the hard copies on file for five years. Additionally the U.S. State Department will require the importer to final annual ARs (activity report) detailing import, export and stockpile information. You should expect other levels of scrutiny and inquiry, pursuant to the USA Patriot Act, which will vary in intensity depending on the company's history and origin-of-import. For a newcomer importing rough from Sierra Leone you can expect extreme rigidity.
RE Sierra Leone: Cup half empty version
If you have researched conflict diamonds or have seen the movie "Blood Diamond" you may know that SL, specifically, has a brutal past. The result of the UN and NGO efforts in the late 1990s and early 2000s cleaned things up considerably, especially in SL, but West Africa is a mess. I would be extremely wary of diamonds somehow entering SL from non-participant or expelled countries, and making their way into supply via this new, "legitimate" chain. And while greed is not exclusive to West Africa - dubious rough could pop up anywhere - you can expect a long list of manufacturers, suppliers and retailers who will choose not to do business with you, simply based on the origins of the rough.
RE Sierra Leone: Cup half full version
On the other hand, if the situation your partners bring to the table is improving the lives of workers in SL in a demonstratable way your "think tank" may be wise to suggest a Fair Trade approach (think Fair Trade coffee, sugar, etc.). In short, the idea would be to create a channel where proceeds from retail sales of the product travel back upstream to benefit the people who harvested the product. SL is certainly a candidate for this. It's the opposite of a boycott, which can hurt the very people it's supposed to help. The fair trade topic is increasingly discussed as social media creates platforms for demonstration. It would be costly, and you can expect serious challenges, but it could create consumer evangelism in the long run if done correctly. It's definitely the harder road.
Summary
With the above said, it might not surprise you that I agree with the others who are wary of this situation. Consider the following:
1. Export is easy for legitimate traders with proper documentation... Why do they need you?
2. NYC is not an efficient sales center for rough... Why travel farther and sell slower for less profit?
3. American suppliers and sellers resist West African rough... Why add that challenge to the above?
4. Companies with an Asian base will buy easier with less hurdles... Why not maximize turnover and profits in that avenue?
If I was their consultant - knowing only what I've read in this thread - I'd be inclined to offer this:
"Gentlemen and ladies, we thank you for your business. If you wish to maximize your opportunities and profits we suggest you export to nearby Antwerp. There, you'll find hungry customers with factories in China who pay 0% VAT on their rough diamond imports, have an established market with no resistance to your goods and the steepest projected consumer-demand in the world for years to come... If opportunities and profit are less important to you than beneficiation we can discuss other avenues such as Fair Trade."
That would demonstrate your company's integrity to them. It would also allow them to make the choice to continue with your involvement if entering the USA market is important to them for reasons other than growth and profitability.
I hope this is helpful.
First off thank you everyone who posted in this thread. All the information I have heard so far has been very helpful (especially John and Paul). Pricescope is an awesome community! Just to confirm I am a consultant who's company is being paid to offer advice to this person with government connections but limited industry experience. My clients first customer is likely to be in NYC, but obviously we want to explore a variety of different target markets. At the moment I am trying to figure out what the average price differential between Africa and the US is. Obviously I am still learning about the industry and it would be naive to say I understand the market even 5%. This is a 3 month engagement and I will keep you guys updated as I continue to learn more.
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As for you stating that the supplier has government connections, I advise you to check AML- and PATRIOT-act-details in the US.
I do not know the details of American legislation, but under Belgian Anti-Money-Laundering-legislation, we as diamond-dealers have to report as suspicious any potential purchase of diamonds, in which the ultimate beneficiary of the purchase has close government-connections in the originating country.
Live long,
I do not know the details of American legislation, but under Belgian Anti-Money-Laundering-legislation, we as diamond-dealers have to report as suspicious any potential purchase of diamonds, in which the ultimate beneficiary of the purchase has close government-connections in the originating country.
Live long,
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Why do you think there is a price differential between Africa and the US?ishiboy|1339999591|3218552 said:
More importantly, why is 'average' useful information, even if its available? Tiny details are EVERYTHING in this business and these details include not only the obvious and not so obvious sorting and grading issues but the nature of the transaction itself. Location is not a primary issue. What exactly you have, who is buying and who is selling, and the terms and conditions of the deal are the primary issues that drive the price. This is true even if the USA price is discounted by the expected cost of shipping the goods to get them to a more approprite place. Any serious diamond buyer will have no problem with arranging that shipment if needed and it's not a significant piece of the costs for this sort of deal. If it's convenient for your buyer to do the deal in the US, by all means do it there but the fact that they're in the US isn't what will make them interesting (or not).
Thanks denver. Well the reason I am trying to figure out the average differential is to financially model project company revenue, cogs etc. Production companies typically have a operating margin in the 22-26% range whereas rough diamond sales has a typical operations margin of 1-3%. My job here is to figure out how to help this company maximize their revenue and value add created, and come up with a strategy accordingly. Again these will be forecasts and I realize every diamond/every deal is different but I was looking for information that will guide my assumptions of average price differential. Apparently, there are global price lists that update every week - having access to a pricelist like that would be quite beneficial.
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You are selling rough diamonds, which is not in any way comparable to polished diamonds.
There are pricelists for polished diamonds, and even those require a lot of inside-knowledge about the industry and the product before one can use them.
There is no pricelist, at least not a usable and/or accessible one, for rough diamonds. You have rough diamonds, period. That means that if you have a rough diamond weighing 5.25Ct., it could be worth anything between 0.25$/Ct. and 1 million $/Ct.
You frankly have no idea. Honestly, me with over 20 years of inside-experience, I could be outside of the ballpark by a factor 2 if it concerns rough that is not my specialized quality-range.
Could it be that your company is being hired, so that the fancy looking report can be used to entice outside investors into this venture? If so, when do you become liable?
Live long,
There are pricelists for polished diamonds, and even those require a lot of inside-knowledge about the industry and the product before one can use them.
There is no pricelist, at least not a usable and/or accessible one, for rough diamonds. You have rough diamonds, period. That means that if you have a rough diamond weighing 5.25Ct., it could be worth anything between 0.25$/Ct. and 1 million $/Ct.
You frankly have no idea. Honestly, me with over 20 years of inside-experience, I could be outside of the ballpark by a factor 2 if it concerns rough that is not my specialized quality-range.
Could it be that your company is being hired, so that the fancy looking report can be used to entice outside investors into this venture? If so, when do you become liable?
Live long,
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This reminds me of a student calling a teaching assistant about a term paper, when as the conversation goes on you realize the student really just wants the teaching assistant to write the term paper for them...
No offense, but it doesn't seem like you have sufficient information to do what you are being asked to do (either in general about the industry, or specifically what this seller is selling and where and how). Are you going to just make up numbers?
No offense, but it doesn't seem like you have sufficient information to do what you are being asked to do (either in general about the industry, or specifically what this seller is selling and where and how). Are you going to just make up numbers?
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The pricelist you’re talking about is probably rapaport.com but I second the comments from Paul above that it doesn’t apply in any way to your situation. Feel free to get a subscription though, the magazine is good reading and it may teach you some things.
If your client wants to maximize his/her value-add, they need to actually have some value-add. What is it? Location? I’m surprised you’re even seeing as much as 1-3%, and that is more than offset by the value-minus from the questionable provenance. Perhaps you’re just being coy to protect your client relationship but ‘government connections’ in Africa means a wild range of things that aren’t all good.
If your client wants to maximize his/her value-add, they need to actually have some value-add. What is it? Location? I’m surprised you’re even seeing as much as 1-3%, and that is more than offset by the value-minus from the questionable provenance. Perhaps you’re just being coy to protect your client relationship but ‘government connections’ in Africa means a wild range of things that aren’t all good.
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