Rough diamonds sales slightly lower in sixth cycle

10 Aug 2018

De Beers’ provisionally sale of rough diamonds in its latest sales cycle is down 9 percent, a decline that was widely expected due to slowdown in seasonal slowdown rather than structural change to demand.

In the sixth sales cycle of the year, also known as sights, De Beers’ sold $530 million in rough diamonds, down from $581 million sold during the previous cycle and also an 8 percent drop compared to the same period a year ago.

Bruce Cleaver, CEO, De Beers Group, said: "In the sixth sales cycle of the year, demand for De Beers rough diamonds was in line with expectations during the seasonally quieter summer period for the industry’s midstream sector," particularly with the Antwerp industry entering its summer recess.

The mining giant holds ten Global Sightholder Sales and Auction Sales every year in Gaborone and the sights or auction sales are restricted to its sightholders who buy the diamond packages at a price determined by De Beers. Gaborone has now emerged as an important rough sales centre after the decision to move De Beers’ sorting operations and sight location to Gaborone in 2013.

Still, Antwerp remains the most important rough trading hub, and has maintained its critical mass of rough activity, as noted in the May issue of the Rapaport Research Report. An estimated 84 percent of all rough diamonds passes through Antwerp, with many of the smaller and medium-size miners holding auctions there. But Dubai has emerged as the second largest rough trading centre in recent years.

De Beers sells an estimated 90 percent of its production through its long-term contracts with sightholders, with the current contract set to end in March 2019.The remaining 10 percent is sold at its auctions. The company has 67 global sightholders, 17 in Botswana, six in South Africa, nine in Namibia, one in Canada and three receiving industrial rough supply. Sightholders in southern Africa have to manufacture the majority of their supply in those countries. De Beers also makes available any excess supply – known as ex-plan – to 14 accredited buyers across its various sights.

With six sales cycle of the year done and four left, De Beers’ rough sales stands at $3.42 billion, a drop of 2 percent from the corresponding period last year. Also, the half year results for the year ended 30 June 2018 reveal that De Beers revenue was slightly up 1.9 percent to $3.2 billion on the back of increases in rough diamond prices that edged 4 percent in the first three months of the year.