Wednesday, October 21, 2020

De Beers on Covid-19 impact

The De Beers Group has confirmed that the global impact of COVID-19 and the subsequent restrictions on the movement of both people and goods has had a major impact on wholesale demand for both rough and polished diamonds, and consumer demand for diamond jewellery.

The company’s Sight three was not held in light of logistical challenges related to lockdowns in Botswana, South Africa and India while Sight 4 was only attended by local beneficiation Sight holders as international customers unable to travel.

 De Beers Executive Vice-President, Diamond Trading Paul Rowley said while lockdowns are now beginning to ease in some countries, a return to ‘normal’ activity appears some way off, other countries have yet to see a peak, adding that concerns of further waves of infection persist.

On the mainstream, he said with the vast majority of the world’s diamonds being cut and polished in India, the lockdown there saw midstream demand grind almost to a halt. He stated that restrictions on international travel and shipping also saw trading activity dry up in key centres.

On the upstream, Rowley stated that mines across the world have seen operations paused or stopped, adding that questions regarding whether some operations will return at all after the pandemic. He said with those mines that are operating, there remain significant logistical challenges and operations are at a reduced level.

“In the US lockdown has led to severely reduced consumer demand in the market representing around half of global demand. Some States now relaxing lockdown restrictions but most stores remain closed and demand heavily impacted,” he said.

He further confirmed that in China, lockdown restrictions severely impacted retail sales in second largest global market. He said most stores now open again. He observed that consumers returning and encouraging signs, but still below former levels.  In India, he said ongoing lockdowns across the country continue to have a significant impact on demand.

Quizzed on the impact on De Beers Group, he said indirect impact through the value chain as impact on consumer demand ripples through pipeline and also had direct impact on De Beers Jewellers retail outlets due to store closures and consumer demand impact. He confirmed impact on Forevermark business as jewellers partners impacted by store closures and consumer demand.

“Operations across the globe impacted. There are requirements to implement different working practices and procedures to keep our people safe,” he stated.

Rowley said they are working with partners in government to see how they can generate revenue when international customers are unable to travel– focus on viewings in other centres as a temporary measure. He added that there is reduced global production guidance by 7m carats to reflect demand and support long-term value. He said they are refocusing and repurposing marketing plans to reflect changing situation on timing, targeting and product types.

“Despite the challenges, we continue to make major investments across the diamond value chain to ensure the industry’s continued success during these unprecedented times,” he said.

He is of the view that it is impossible to provide a detailed outlook as so much depends on the progress of the virus and government responses, adding that however, early indications from places that have reopened suggest demand can recover quite quickly. He stated that they will be leading the recovery and reinforcing how diamonds will continue to have a key role to play in people’s lives after the lockdowns through the consumer engagement activities.

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