Thursday, February 29, 2024

India’s rising Covid cases slows diamond industry recovery

The Covid-19 pandemic ravaging India has been a drag on the diamond industry which was expected to make a strong recovery.

On Wednesday, De Beers reported that the value of rough diamond sales for the fourth sales cycle has been provisionally set for $380 million, lower than the $450 million fetched in the third sales cycle. The diamond mining giant sells rough diamonds through ten Global Sightholder Sales and Auction Sales held every year in Gaborone, with the sights or auction sales restricted to certain sightholders who buy the diamond packages at a price determined by the company.

“We continue to see robust demand for diamond jewellery in the key US and China consumer markets. However, the scale of the second wave of Covid-19 in India, where the majority of the world’s diamonds are cut and polished, has led to reduced midstream capacity and subsequently lower rough diamond demand, during what is already a seasonally slower time of year for midstream purchases, “ said Bruce Cleaver, the chief executive officer of De Beers Group.

“Our thoughts are with all those in India as the country navigates the current challenges presented by the pandemic – reminding us that the road ahead remains uncertain and that we must continue to adopt a watchful approach.”

De Beers, which is 85 percent owned by Anglo American and 15 percent by Botswana government, reported a 7 percent reduction in rough diamond production in the first quarter of the year, mining 7.2 million carats compared to 2020’s first quarter production of 7.8 million carats.

Though output was slightly down, demand for rough diamonds in the first quarter recovered to pre-Covid-19 levels reflecting the replenishment of the depleted midstream, and renewed confidence by the midstream in response to the return of consumer demand for diamond jewellery in the US and China which began in the last half of 2020.

Rough diamond sales totalled 13.5 million carats from three sights, compared with 8.9 million carats from two Sights in the corresponding quarter last year and 6.9 million carats from two sights in the last quarter of 2020.

The top world diamond producer by value in 2020 sold $2.79 billion of rough diamonds, lower than the $4 billion earned in 2019, and much lower than $5.39 billion in 2018 and $5.31 billion in 2017. De Beers’ rough diamond sales are yet to top the $5.6 billion reached in 2016.

De Beers’ production guidance for this year remains at 32 to 34 million carats, subject to trading conditions, the extent of further Covid-19- related disruptions and ongoing operational challenges. The higher production is expected to be driven by an anticipated increase in ore and improved grade performance at both Jwaneng and Venetia mine.


Read this week's paper