Tuesday, September 29, 2020

De beers ninth sales circle of rough diamonds lowest in 2018

BY BONNIE MODIAKGOTLA

De Beers, the world leading diamond miner, has reported the lowest sale of the year for its latest sight, continuing a trend that began mid-year as developments in India led to depressed rough diamond sales.

In the ninth sales cycle of the year, also known as sights, De Beers’ sold $440 million in rough diamonds, down from $482 million sold during the previous cycle. The latest sight sales value is also 5.5 percent lower than the corresponding sight last year.

Bruce Cleaver, CEO of De Beers Group, said: “As the industry’s focus turns towards the key end of year retail selling season, rough diamond sales continued to be in line with expectation during the ninth cycle of the year. While demand for smaller, lower quality rough diamonds continues to see some challenges, the latest cycle saw some signs of improvement in this area as factories in India begin to reopen after Diwali.”

The challenges Cleaver alludes to started around the fifth sales cycle and they are tied to developments in India – the top destination for rough diamonds. India’s influence is largely felt in the midstream of the diamond value chain which represents the cutting and polishing of diamonds is where India holds sway. The country is home to the world’s largest diamond cutting and polishing industry, with experts estimating that 80 to 90 percent of diamonds are cut and polished in India.

The slowdown in rough stones demand from India is fueled by several factors, ranging from the reputational harm the industry went through due to fraudulent behavior from some leading firms, and it is also down to currency fluctuations ÔÇô the weakening Indian rupee against the strengthening dollar.

Furthermore, majority of small and medium diamond manufacturing units in India are planning to close shop and take an early Diwali vacation as sentiment in the diamond cutting and manufacturing centre is faltering. Depreciation of the Indian rupee has put heavy pressure on the trading of polished diamonds amid dwindling demand, falling polished prices, firm rough diamond prices and the banks squeezing loans to the industry. 

De Beers 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. However, the slowdown in uptake of rough diamonds forced the usual strict De Beers to slash its prices on lower quality diamonds during the ninth sight, according to media reports.

In also another unusual move from the diamond mining giant hinted on its production report that customers were allowed to refuse to buy – or rather, postpone their purchase of – some lower-quality stones, with the caveat that they still had to purchase their quota of gems before the end of the year. This was unusual as De Beers typically requires Sightholders to take the parcels offered for sale.

De Beers’ diamond production in the third quarter eased due to combinations of expected lower grades and a shutdown at some mines as the mining giant upgrades its processing plant ahead of its transition from open cut to underground mining.

“Rough sales volumes were down as a result of Sightholders being given the opportunity during the seventh Sight of 2018 to re-phase the allocation of some smaller, lower value rough diamonds. Rough sales revenues were broadly in line with Q3 2017,” the company revealed in report.

With one more sight left and slated for December, De Beers from the nine sales held this year has sold rough diamonds worth $4.85 billion, roughly the same figure in the previous under same period of nine sales. Sales from the upcoming tenth cycle is expected to low as well, and sentiments will only improve in the first sale of 2019, as trend shows that De Beers records its highest sale of the year in the first sight.

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The Telegraph September 30

Digital edition of The Telegraph, September 30, 2020.