It won't come as anything of a surprise to readers that 2016 was another challenging year for the global diamond industry.

 

We have all felt – whether you are a diamond manufacturer, trader, wholesaler or jewelry maker, or even just a humble industry journalist – the difficulties the trade is going through.

 

I have visited a range of diamond hubs during 2016 and the subdued atmosphere has been very striking. Unfortunately, there are still people leaving the trade for other lines of business because they simply cannot make enough profit to continue.

 

The year started off with solid rough diamond sales as manufacturers re-stocked following the slowdown in the second half of 2014 in protest at what were seen as unrealistically high prices. And, at the end of year, De Beers' final sales cycle meant its revenue for rough sold in 2016 came in at around $5.6 billion, a significant improvement on 2015, but only because rough sales collapsed for most of the second half of last year.

 

And talking of De Beers, its mother company – mining giant Anglo American – was the highest riser on the London Stock Exchange this year with an increase in its share price of around 280 percent. Then again, it sank to a nadir at the start of this year and is now back to a level it last saw in mid-2015, so shareholders may be relieved but not necessarily impressed.

 

Talking of a nadir, the failure by Lucara Diamond Corp to sell the 1,109-carat Lesedi La Rona diamond in June came as rather a shock, not least to the miner which later admitted that offering the diamond for sale at a Sotheby’s auction was probably a mistake. While some blamed the shock Brexit vote which preceded the sale by a week, diamantaires were reportedly unhappy at bidding for the stone in the full glare of the world's media and said they would have preferred to buy quietly with as few bystanders as possible.

 

Meanwhile, the American economy more or less marked time during 2016. Uncertainty surrounding the US presidential election had an effect on industry and commerce. Although the US economy is in far better shape than it was exactly eight years ago, just after the financial crisis, it still seems to be missing that spark that will get it back on to a really strong growth path. Can President Trump bring that about? Increasing infrastructure and other spending and cutting taxes will put more money in people's pockets, but will they be willing to spend those dollars on diamond jewelry?

 

Talking of finances, the year has ended with the 'Carat Tax' being approved by Belgium's parliament, and the signing of a new agreement between the heads of the Israeli diamond sector and the country's tax authority.

 

The so-called 'Carat Tax' will come into effect for all official diamond traders in the 2017 tax year applying to income generated this year. The 'Diamond Regime' means that diamond firms will not pay tax on profits, but rather on a fixed percentage of turnover.

 

Although diamantaires are likely to pay more tax overall, the advantage of the regime is that it makes the amounts of tax they will pay more predictable. That will also bring an end to complex discussions and uncertainty regarding tax bills. The new arrangement may also have the effect of persuading financiers to provide credit to diamond companies, according to the Antwerp World Diamond Centre (AWDC).

 

Meanwhile, after almost a year of intensive negotiations, the Israeli diamond industry in December finalized the terms of an agreement with the Israel Tax Authority. One of the achievements of the agreement is that diamantaires will no longer pay taxes when they incur losses. Moreover, they will now be able to deduct all of their expenses from income and will pay tax only when they show a profit.

 

Since the new tax agreement puts diamantaires in compliance with international financial guidelines, expectations in the industry are that it will now become easier to access much needed lines of credit. As IDE President Yoram Dvash said, the new agreement greatly reduces the risk factor for the banks and he expects a significant increase in bank credit to result.

 

Let's hope that he is right and that in both Israel and Belgium – two of the world's major hubs – as well as in the rest of the worldwide diamond business, 2017 brings more cheer than did 2016.

 

May I wish you – whichever holiday you are celebrating – a happy and peaceful break.