A Real Treasure

Since 2003, Dubai has successfully managed to reroute around one-quarter of the world’s gold and diamond trade through its ports. Dubai’s status as a gold and diamond trading hub has been cemented through platforms created under the Dubai Multi Commodities Centre (DMCC). The DMCC runs several organizations, including the Dubai Tea Trading Centre (DTTC), as well as the Dubai Diamond Exchange (DDE), and the Dubai Gold and Commodities Exchange (DGCX). Established in 2002, DMCC also acts as the licensing authority for the Jumeirah Lake Towers (JLT) Free Zone, which hosts 6,300 companies across a range of sectors, including the gold and diamond sectors.

The effects of the DMCC and the DGCX have been clear on the gold trade, with $70 billion worth of gold traded through Dubai in 2012. This is up from just $6 billion in 2003, and a large increase over the 2011 figure of $56 billion, thanks to high gold prices over 2012. The price of gold hit $1,900 a troy ounce in September 2011, and stayed around a similar level over 2012. “DMCC acts as a trade facilitator and supports the government of Dubai through a variety of initiatives, regulations, and products that we introduced, principally within the gold and diamond sector,” said Ahmed Bin Sulayem, Executive Chairman of the DMCC, adding that “approximately 25% of the world’s gold now trades through Dubai.” A newer development is DGCX’s plan to debut a spot gold contract by end-2013, which will likely boost the amount of gold traded through the Emirate. The DMCC is also keen to see refining capacity increased, with a $60 million, 1,400-ton capacity refinery set to be opened in 2014 by the Kaloti Group.

In terms of diamonds, Dubai is now the third largest trading hub in the world, with $39 billion worth traded in 2011, and a similar figure posted in 2012. In the same year, Mumbai passed Antwerp as the world’s largest diamond trading hub, with $60 billion worth of stones passing through the city. Like gold, the diamond trade has also experienced a steep growth trend over the last 10 years, with the value of diamonds traded through Dubai in 2003 registered at just $5 million.

The DMCC and the DDE have also worked to establish the UAE Kimberley Process Certification Scheme (KPCS), which is a public-private initiative to help stem the flow of conflict diamonds into the legitimate diamond trade. “Set up to assure consumers that the diamonds they are purchasing are conflict free, the KPCS was implemented in the UAE in 2003, making it the first Arab country to introduce this process,” commented OMCC’s Ahmed Bin Sulayem. The KPCS also ensures that the DMCC is the only entry and exit point for diamonds in the country.

Dubai’s diamond traders will now likely focus on the role the Emirate will play as a logistical hub between African producers and the cutting centers in the Far East, while gold traders will continue to take advantage of the global appetite for a commodity that is considered a safe bet in times of economic downturn. So far, the DMCC has been successful in its decade-long goal to reroute much of the world’s gold and diamonds through Dubai and the JLT. As demand for precious commodities in the Middle East, Africa, and the Indian Subcontinent grows, Dubai’s central location will only further cement its role in global trade.