The value of gold and diamonds being physically imported and exported through Dubai is rapidly rising, strengthening Dubai’s position as a commodity hub to rival other traditional hubs in Europe.

In 2012, a total of $70bn-worth of gold was traded through Dubai, with volumes likely to increase throughout 2013. The value of Dubai’s gold market is almost 12 times the size of the market in 2003, when just $6bn-worth of gold was traded through the emirate. 

The diamond trade is also growing. In the early 2000s, the diamond trade stood at about $3m-5m. By 2011, more than $39bn-worth of diamonds were traded in Dubai. The market continues to grow, with total trade volume recorded in January and February this year standing at 20 million carats, an increase of 7 per cent compared with the same period last year. This equates to $1.9bn-worth of diamonds, marking an 11 per cent rise on same period in 2012.  

This rapid growth is being mainly driven by the Dubai Multi-Commodities Centre (DMCC) since it was established in 2002. The DMCC is driving the prominence of Dubai in the global precious metals and gems market by encouraging commodity companies to set up in the Jumeirah Lake Towers (JLT) Free Zone it is developing, as well as providing services such as gold and diamond vaults, and the Dubai Gold and Commodity Exchange.

The importance of the DMCC to the gold industry was further cemented with the news in early April that UAE-based Kaloti Jewellery Group is to invest in a $60m gold and precious metals refinery within the free zone. The refinery is expected to be completed in late 2014, and will have the capacity to produce up to 1,400 tonnes of gold, 600 tonnes of silver and other precious metals.

The DMCC is also looking to capitalise on the increasing interest from African countries wanting to set up offices in the centre and trade their commodities through Dubai.

Increasingly, African countries are looking to take greater control over their mineral resources distribution, rather than relying on European-based companies.

“The global diamond industry is no longer dominated by Western countries,” the executive chairman of the DMCC, Ahmed bin Sulayem, recently said at a conference.

At the same conference, Obert Mpofu, the Zimbabwean minister of mines and mining development, said: “The market opportunities here are exactly what we need to create the stability necessary in the global diamond trade.”

The Zimbabwean government is now said to be looking to set up an office within the DMCC, as are several other African governments.

The African continent will clearly be a target market for the DMCC in the future, helping drive future growth in the trade of commodities through the Dubai-based centre.

“We have a very clear Africa strategy we know exactly what we are going to do there and how we are going to achieve it,” says Malcolm Wall Morris, chief executive officer (CEO) at DMCC. “We are 100 per cent committed to increasing trade flows with Africa.”