BY BONNIE MODIAKGOTLA
The diamond mining giant De Beers has recorded its lowest rough diamond sales cycle as the miner continues to struggle with declining sales, the company revealed this week in its latest sales cycle report.
The provisional rough diamond sales for the fifth sales cycle, also known as sights, dropped to a 20-month low of $390 (P4.1 billion) ÔÇô down 33 percent from 2018’s fifth sale of $581 million (P6.2 billion) and a 6 percent decrease from the fourth sales cycle of the year which netted $416 million (P4.4 billion).
The latest fifth sales cycle is the lowest of all June sales since De Beers started publishing its data in 2016, and the sight is usually a money spinner for De Beers, fetching $564 million in 2016 and $541 million the year after.
“While overall retail sentiment for diamond jewellery in the US remains solid, a more challenging environment in China and higher than normal polished diamond inventories in the midstream resulted in a cautious approach from rough diamond buyers during the fifth cycle of 2019,” Bruce Cleaver, CEO, De Beers Group, said in a statement.
It has been a rough start to the year as De Beers opened the year with lower sales underpinned by concerns over decreasing demand for lower value rough diamonds. This forced the miner to break with its tradition- allowing buyers to postpone their purchase of some lower-quality stones, with the condition that they still had to purchase their quota of gems before the end of the year. This resulted in the unusually higher sales recorded in the last sight of 2018, which was even higher than January 2019’s opening sale ÔÇô an uncommon occurrence for De Beers.
Traditionally, the first sight of the year has always been the largest of the year as traders and manufacturers return to the market after working down their inventories over the festive selling period. The decline was attributed to “the slow movement of lower value rough diamonds through the pipeline”.
The diamond-mining giant holds ten Global Sightholder Sales and Auction Sales every year in Gaborone and the sights or auction sales are restricted to its top 80 Sightholders who buy the diamond packages at a price determined by De Beers. However, faced with declining sales and muted demand for lower quality stones, De Beers is reported to have cut prices by an estimated four to five 8 percent, sight participants told Rapaport’s Diamonds.Net, a leading publisher of diamond related news.
With the latest rough diamond sales, De Beers this year has so far raked $2.38 billion (P25 billion) in the first half year sales, an 18 percent slump from the previous corresponding period last year.