Tuesday, September 22, 2020

Rough diamonds demand on the rise as De Beers’s sales goes up

De Beers’ fifth sales cycle of the year has delivered the second biggest sale of the year as the miner continues to see good demand for rough diamonds across its product range.

On Wednesday, Anglo America, De Beers’ parent company, announced that rough diamond demand was strong in the fifth Global Sightholder Sales and Auctions, also known as sights. De Beers’ fifth sales cycle of the year fetched a provisional figure of $575 million, up by 3.8 percent from the fourth sight that brought in $554 million. The latest sight provisional sales value triumphs the $541 million achieved last year in the comparable period.

Bruce Cleaver, CEO of De Beers, said: “Sentiment in the diamond industry’s midstream is positive following the JCK Las Vegas trade show at the start of the month, and we continued to see good demand for our rough diamonds across the product range.”

De Beers, the largest producer of diamonds by value, opened the year strongly with $672 million worth of diamonds in its first sale of the year before recording $563 million second sales cycle, down by 16 percent. The downward pressure continued in the third sales, delivering $524 million, and then picking up 5.7 percent to $554 million for the fourth sales cycle of the year. With all things constant, the fifth sight sales value at $575 million is the second biggest of the year so far.

The mining giant holds ten Global Sightholder Sales and Auction Sales every year in Gaborone and the sights or auction sales are restricted to the top 85 customers who buy the diamond packages at a price determined by De Beers. With half of the sales cycle complete, De Beers has cumulatively sold $2.9 billion worth of rough diamonds in the past six months, slightly lower than in 2017 when they sold $3 billion worth of rough diamonds in the same period.

While there are five sights left, De Beers will likely get one good sales circle in either cycle six or seven as Indian diamantaires make rough diamond purchases in time for polishing before fide day Diwali holiday begins. Diwali, the festival of lights, is India’s largest and most important holiday in the calendar. This year the Diwali kicks off in November, and the season always sees strong marketing and advertising  of jewellery, and for jewellery designers, Diwali is the perfect time to promote jewellery designs adorned with diamonds and coloured gemstones.

De Beers is estimated to produce 34.6 million carats worth $5.7 billion in 2018 which is enough to maintain its status as industry-leader in terms of value produced. The production volume figure represents a modest 1.2 million carat increase year-over-year, with the boost expected to primarily come from the company’s Jwaneng mine in Botswana, the richest diamond mine in the world in terms of value produced. In 2018 Jwaneng is estimated to produce 13.5 million carats worth $2.7 billion, which compares to 11.9 million carats worth $2.3 billion in 2017. The mine by itself represents 17 percent of global diamond supply by value on an annual basis and with an estimated resource of over 350 million carats, it has a remaining mine-life of 25 years. 

Meanwhile, the latest trade data from Statistics Botswana show that the country’s trade deficit has widened in April to P1.4 billion after total exports plunged 39 percent to P3 billion. The decrease was mainly due to diamonds exports, which fell from March’s P4.4 billion to the current level of P2.5 billion, representing a drop of 42 percent. Diamonds are the country’s mainstay of the economy and they represent about 85 percent of Botswana’s total exports.

In the first quarter of the year, the trade deficit was around P766 million, a wider drop from 2017’s first quarter trade surplus of P4.7 billion. Still, Botswana’s real GDP is estimated to grow 5.3 percent in 2018, driven largely by the recovery in the mining sector. Furthermore, improved global demand is expected to support performance of the domestic economy.

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The Telegraph September 23

Digital edition of The Telegraph, September 23, 2020.