De Beers is moving its auctions headquarters from Singapore to Botswana in a move designed to streamline its operations and cut costs.
The UK-based miner sells around 10 per cent of its rough, by value, via online auctions to almost 1,000 registered buyers. The other 90 per cent is sold to sightholders.
In a statement the company said De Beers Group Auctions would pause it operations and sales events in the coming months, while the transition takes place.
Last year De Beers postponed its Cycle 5 and 6 auctions amid dwindling demand from Indian manufacturers and in January it introduced a new online “sealed bid” tender called The Offer for some of its rough diamonds.
Al Cook, De Beers Group CEO, said the move would drive cost efficiencies and support the needs of customers.
Last December Anglo American, parent company of De Beers said the diamond miner would have to cut $100m from its annual overheads in the face of ongoing weak demand.
De Beers moved its Sights from the UK to Gaborone, Botswana, in 2013.
BHP’s share-swap take over bid for arch-rival Anglo American to create a $185 billion mining giant will struggle to succeed, but if it does there is one arm of the target certain to be sold, the De Beers diamond business.
Despite its century-old reputation and claim to be the custodian of the diamond industry De Beers has become more trouble than it’s worth, under attack from two directions. Demand for diamonds is being battered by global economic uncertainty while the problem of slowing sales is being supercharged by the increasing popularity of lab-grown gems which are indistinguishable from mined diamonds.
A third factor which could seal the fate of De Beers is that BHP quit the diamond industry a decade ago after struggling to mix mining, and its basic function of heavy-duty earthmoving, with the fine art of producing and marketing baubles for the rich and newlyweds.
It could get worse for the diamond mining business because prices for lab-grown gems are continuing to fall as a market split widens. High-value jewels remain of interest to a handful of wealthy people, while the lion’s share of the market shifts to lab-grown.
De Beers, which was a pioneer in the business of lab-grown gems via its Lightbox subsidiary, has consistently played down the threat to its traditional mined-diamond business but sustaining that argument became a little harder on Tuesday when it reported a big production fall in the March quarter.
The 23% drop in output caused Anglo American to lower its full year diamond production target from between 29 million and 32 million carats to between 26-and-29 million carats.
Management blamed the decline on the effect of a build-up of inventory of unsold stones with lab-grown gems cannibalising demand for mined stones.
Forbes Daily: Join over 1 million Forbes Daily subscribers and get our best stories, exclusive reporting and essential analysis of the day’s news in your inbox every weekday.It Could Get A Lot Worse It could get a lot worse if a recent study of the diamond market by a specialist London jewelry firm is a guide.
The video player is currently playing an ad. You can skip the ad in 5 sec with a mouse or keyboard According to Hatton Jewels, which specialises in handling antique second-hand gems and does not sell lab-grown gems, some lab-grown diamonds are spectacular overpriced with retailers inflating their prices by as much as 1200%.
Rachel Smith, head valuer at Hatton said that in the current landscape, every business pays a similar wholesale price for lab-grown diamonds, regardless of disparities in their retail market value.
“The wholesale price of lab-grown diamonds can plummet to as low as 1% of their natural counterparts’ value,” Smith said in an emailed statement.
Smith cited three retail prices for a two-carat F VS1 (high quality) lab-grown diamond being offered for sale at $11,375, $2730 and $866. A gem of that size and quality costs between $500 and $759 to make.
“While some companies uphold integrity by selling lab-grown diamonds at fair market value, ensuring equitable competition, others exploit the situation for profit.
Diamond “growing” machines in India. “Some retailers inflate prices by as much as 1200%, potentially driven by a desire to maintain the narrative that they are not different from natural diamonds, otherwise they may be considered too cheap and therefore undesirable, or to capitalize on trends at the expense of consumers.”
If Smith is right and lab-grown diamonds are currently being sold at inflated profit margins, the ease with which they are produced will ensure an increase in supply, resulting eventually in a price crash.
When that happens the value of the once-great De Beers business will fade, and the appeal to a mining company like BHP will disappear — if it succeeds in acquiring Anglo American.
It’s 50 years since the world’s largest octahedral diamond was recovered, and even today it remains uncut, unpolished and unsold.
The 616-carat Type 1 yellow diamond, dates back to 17 April 1974 and comes from the Dutoitspan Mine in Kimberley, South Africa, which opened in the 1870s and closed in 2005.
The miner who found the diamond, De Beers employee Abel Maretela, was rewarded with a large bonus and a house.
Al Cook, De Beers Group CEO, was shown the diamond on a visit to Johannesburg, by Moses Madondo, CEO of De Beers Group managed operations.
“I’m a geologist so I love to learn about the history of diamonds even before they were found,” he said in a LinkedIn post.
“This is a Type 1 diamond which means that it was formed around 150 km below the earth’s surface, deep in the mantle, over 1 billion years ago.
“During the Cretaceous period, about 100 million years ago, a kimberlite volcano brought this diamond up to the earth’s surface. Its beautiful yellow colour comes from nitrogen atoms that were trapped inside the carbon lattice when it was forming in the mantle.”
March US retail sales increased at a slower pace than the previous month’s as inflation eased and the job market improved.
Revenue grew 0.7% from the month before to $709.6 billion — adjusted for seasonal variation — compared to an increase of 0.9% in February, according to data the US Census Bureau released Monday.
“As inflation for goods levels off, March’s data demonstrates steady spending by value-focused consumers who continue to benefit from a strong labor market and real wage gains,” said National Retail Federation (NRF) CEO Matthew Shay. “In this highly competitive market, retailers are having to keep prices as low as possible to meet the demand of consumers looking to stretch their family budgets.”
Sales climbed 2.7% from a year earlier, on par with February’s year-on-year results, the NRF added.
March sales were up year on year in six of the nine retail categories the NRF monitors, compared to eight last month. Sales in the clothing and accessories segment — which includes jewelry — were flat compared to February, but advanced 2.1% versus the same period a year ago. Online sales saw the largest year-on-year gain, rising 15%, while electronics, furniture, and building and garden supply products fell.
De Beers has introduced a new online “sealed bid” tender for some of its rough diamonds.
The Offer, which went live last week, allows buyers to key in the price they’re prepared to pay for a lot, unseen by other bidders.
It is an additional sales channel rather than a replacement for the online auctions that have been taking place since 2008.
Online auctions have accounted for the 10 per cent of De Beers production that is not sold at Sights.
“We are constantly looking at new ways for customers to source natural diamond supply with a view to make the experience as simple and flexible as possible while keeping commerciality in mind,” said Rhyzard Bilimoria, account director in De Beers Group Diamond Trading.
“We believe that for certain product ranges and during certain industry conditions, the Offer represents the most effective channel to meet customer and industry needs.”
He said the Offer was quick, simple, confidential and allowed buyers to bid any amount.
“We recognise that in periods when trading conditions are evolving, different customers can perceive different value depending on their specific activities – it is therefore beneficial to implement a sales process where there is no visibility of other bidders’ activity, as this supports customers’ ability to make independent assessments of value that reflect their own underlying demand.”
De Beers cancelled its online auctions in the last two sales cycles of 2023 amid slow demand.
De Beers reduced rough-diamond prices by an average of 10% to 15% at this week’s sight, aiming to stimulate sales and bring its rates more in line with the rest of the market, sources told Rapaport News.
The miner lowered prices by 5% to 10% for rough under 0.75 carats, with thinner or no reductions for the smallest items that produce melee, sightholders and other market insiders said Monday on condition of anonymity.
Rough weighing 0.75 to 2 carats saw reductions of approximately 10% to 15% on average, while prices of 2-carat and larger goods dropped about 15%, the sources added.
Select makeables — the 2- to 4-carat rough stones that produce SI2 to I2 diamonds — fell more sharply, with estimates ranging from 20% to 25%. This reflects the impact of lab-grown competition on mid-market US demand in the past year, sightholders explained. De Beers does not comment on pricing.
De Beers tends to sell less volume during a downturn and reduce prices only once the polished market has improved. The RapNet Diamond Index (RAPI™) for 1-carat diamonds slid 21% in 2023, the worst year on record for the category, but sightholders reported a moderate uptick in US demand since the holiday shopping season began, though Chinese orders remain weak.
The global market also stabilized as a result of India’s two-month voluntary freeze on rough imports, which ended December 15.
“[In the past, De Beers] didn’t want to change prices because they didn’t know [what the state of the] polished [market] was,” one of the sources commented. “They have an idea where polished is now, and have adjusted rough to polished.”
However, several sightholders said the drops did not go far enough, with De Beers’ prices still above those of outside tenders and auctions and also too high for many manufacturers to make a profit.
Even with the price reduction, the sources expected demand at the sight to be limited, with sales of around $300 million. The trading session, De Beers’ first of the year, began Monday and runs through Friday in Gaborone, Botswana.
When the world’s most important diamond buyers arrived at De Beers’ offices in Botswana late last month, they were presented with a rare offer by their host: the option to buy nothing at all.
De Beers markets its rough diamonds in a series of tightly scripted sales, where handpicked buyers are normally expected to take all their contracted allocations at a price set by De Beers, or face potential penalties in the future. But with prices in free fall around the world, the one-time diamond monopoly has been forced to allow more and more flexibility, finally removing the restrictions altogether.
The concessions are the latest in a series of increasingly desperate moves across the industry to stem this year’s plunge in diamond prices, after slowing consumer demand left buyers stuck with swelling inventories. De Beers’s great rival, Russian miner Alrosa PJSC, already canceled all its sales for two months, while the market in India — the dominant cutting and trading center — had self imposed a halt on imports.
At the recent De Beers sale, its buyers, mostly from India and Antwerp, seized on the unusual flexibility, between them buying just $80 million of uncut gems. Normally De Beers would have expected to shift between $400 million and $500 million at such a sale. Outside of the early days of the pandemic — when sales were halted altogether — the company has not sold so few gems since it started making the results public in 2016.
The speed and severity of the collapse in diamond prices caught many by surprise.
The industry had been one of the great winners of the global pandemic, as stuck-at-home shoppers turned to diamond jewelery and other luxury purchases. But as economies opened up, demand quickly cooled, leaving many in the trade holding too much stock that they’d bought for too much money.
What looked like a cool down quickly turned into a plunge. The US economy, by far the industry’s most important market, wobbled under rising inflationary pressure, while key growth market China was hit by a real estate crisis that sapped consumer confidence. To make things worse, the insurgent lab-grown diamond industry started making major gains in a couple of key segments.
While there are many different diamond categories, broadly prices for wholesale polished diamonds have tumbled about 20% this year, firing a more dramatic fall in rough — or uncut — stones that have plunged as much as 35%, with the steepest declines happening though late summer and early autumn.
The industry’s response was to choke off supply in an almost unprecedented way, which finally seems to be working.
Prices at some smaller tender sales and auctions have risen between 5% and 10% in the past week as shortages of some stones start to emerge. With Indian factories set to reopen next month after prolonged Diwali closures, there is now renewed confidence that the worst has passed.
“The diamond industry has successfully taken action to stabilize things,” said Anish Aggarwal, a partner at specialist diamond advisory firm Gemdax. “That now creates a window to rebuild confidence.”
The plunge in diamond prices has coincided with weakness across the luxury space. LVMH Moet Hennessy Louis Vuitton SE, the luxury titan with 75 labels ranging from Christian Dior to Bulgari, has disappointed investors this year as China’s recovery underwhelmed and demand from US consumers cooled, with the stock shedding more than $100 billion in value since mid April. On Friday, Cartier owner Richemont reported a surprise decline in earnings as revenue from luxury watches unexpectedly fell and high-end consumers reined in spending.
Yet there are specific peculiarities to the diamond industry that make it more vulnerable to slowing consumer demand. De Beers sells its gems through 10 sales each year in which the buyers — known as sightholders — generally have to accept the price and the quantities offered.
When prices are rising, as they did for much of the past two years, these buyers are often incentivized to speculate, betting that paying for unprofitable stones now will pay off if prices continue to rise. Buyers are also rewarded for making big purchases by being given bigger allotments in the future, known in the industry as “buying for position.”
These mechanisms often lead to speculative bubbles, which pop when consumer demand slows and polished diamond inventories build up.
In response, Alrosa stopped selling diamonds altogether for two months, while the Indian diamond sector introduced a halt on imports that will run to mid December. De Beers has allowed its customers to refuse all purchases without it having any impact on the future allocations for its last two sales of the year.
While the two dominant diamond miners have a long history of curtailing supply or letting buyers refuse some goods when demand weakens, the speed and scale of the combined actions is extremely unusual outside of a major crisis such as the outbreak of the pandemic.
While prices have stopped falling — and in some areas rising again — much will depend on the crucial holiday season, which spans from Thanksgiving to Chinese New Year, and how the big miners who have accumulated large stocks of unsold gems feed them back into the market.
There also remains uncertainty in the industry about how much of the slowdown is being driven by macro-economic weakness, versus a more worrying shift in consumer choices. Lab-grown diamonds have made rapid progress in some key segments of the market, while there are lingering concerns in the industry about whether Gen Z consumers look at diamonds the same way as previous generations do.
“We expect there to be some cyclical recovery in the diamond markets,” said Christopher LaFemina, an analyst at Jefferies. “But we believe there are also structural issues here that could lead to weaker than expected demand for the longer term.”
The diamond sorting center in Mirny, Sakha Republic, Russia, November 14, 2013.
De Beers has put its weight behind the World Diamond Council (WDC) plan for sidelining Russian goods amid continued controversy over the competing proposals.
“In pursuit of a collaborative, coherent and collective solution that supports the aims of the G7, we have joined with 22 diamond-industry organizations through the World Diamond Council to progress the ‘G7 Diamond Protocol’ proposal,” De Beers CEO Al Cook wrote in an open letter to Group of Seven (G7) leaders on Thursday. “
The protocol — one of a few plans for keeping Russian diamonds out of G7 nations — calls for importers to declare on invoices that stones do not originate from mining companies operating in Russia. The companies making the claims will undergo audits.
While the WDC-led proposal has received wide industry support, it has also drawn criticism for creating a burden for small-scale industry members — including by Rapaport Group Chairman Martin Rapaport.
One other plan, from the Belgian government and supported by the Antwerp World Diamond Centre (AWDC), proposes using technology to confirm the source of goods, with the European city as a suggested center point for the trade of stones with known provenance.
Two further proposals — from India and a French jewelry group — were also on the table at a G7 meeting on Thursday, Reuters reported.
In another letter earlier this month, the African Diamond Producers Association (ADPA) attacked the process for not consulting people on the continent and claimed some of the plans would harm its members and artisanal miners. It highlighted the “G7 Certificate Scheme” — an apparent reference to the Belgian plan — as well as the WDC protocol.
“The proposed changes will bring supply-chain disruption, added burden, and costs to the ADPA mining nations,” the ADPA wrote in the October 13 letter to the Zimbabwe Minister of Mines and Mining Development, Soda Zhemu, who is chairing the Kimberley Process (KP) this year.
The plans will set a precedent for segregating diamonds by origin and damage producing countries’ ability to cut and polish their rough, the group argued.
In the case of the Belgian proposal, “additional costs will be incurred when a parcel of rough diamonds needs to be first shipped to Antwerp to then be reshipped to the country of origin to be polished,” said the Angola-based ADPA, which represents 19 countries that together account for 60% of global rough production.
Efforts to sift Russian diamonds out of G7 markets have taken on momentum since the bloc — which comprises Canada, France, Germany, Italy, Japan, the UK, the US, and the European Union — pledged to “work closely together to restrict trade” in those goods in May.
Where Are All the Russian Diamonds?
However, while there has been agreement about the need to stop Russia obtaining diamond revenues to fund its war in Ukraine, the process of implementing this has proven complex.
“Throughout our discussions, two things have been clear: why we should do this is easy, but how we should do it is hard,” said Cook.
The executive called for G7 leaders to obtain input from the industry and not exclude relevant groups, including artisanal miners.
“We look forward to further engagement with the G7 around the World Diamond Council proposal and urge those that have submitted proposals to work together to create an effective and practical solution,” Cook continued.
The industry had expected any measures to go into effect in January 2024. However, that schedule is now looking unlikely, JCK reported Friday, citing sources involved in the plans.
“We fully agree with Al [Cook]’s view that the results of our efforts to meet the G7 objectives should be collaborative, coherent and collective,” said WDC executive director Elodie Daguzan in a statement to Rapaport News. “In [the] WDC’s own words, it is what we call ‘an industry proposal that is effective and implementable now and that leaves no one behind.’ Also, we understand that the statement made by ADPA is not against the WDC-facilitated protocol but rather against the G7’s objectives without engagement with African producers.”
Julian Ogilvie Thompson, former chairman and CEO of De Beers as well as of its parent company, Anglo American, died on August 11 aged 89.
Ogilvie Thompson, a South African native, first joined Anglo American in 1956. He was promoted to personal assistant to then chairman Harry Oppenheimer a year later, De Beers told Rapaport News. In 1966, he joined the board of De Beers, and he became deputy chairman in 1982. Three years later, Ogilvie Thompson took over as executive chairman of De Beers, while Oppenheimer’s son, Nicky, filled his previous role.
In 1997, Ogilvie Thompson retired as chairman but remained deputy chairman until stepping down from the company in 2002. He was committed to supporting the development of young leaders from across Africa, forming an 18-year affiliation with the Mandela Rhodes Foundation, which offers scholarship and leadership programs to youth throughout the continent.
“Julian Ogilvie Thompson — often known in the business simply as JOT — was a hugely influential figure in the history not only of De Beers and Anglo American, but also in the broader South African landscape,” a De Beers spokesperson said. “As the former chairman and chief executive of both Anglo American and De Beers, and as a proud South African, he played a key role in shaping both companies and the nation.”
De Beers, the largest diamond producer by value, has unveiled a unique piece it named the “Beating Heart”, a 0.33-carat rough specimen that consists of a diamond within another diamond.
The unusual discovery – a D-colour, type IaAB diamond – has an internal cavity enclosing a smaller loose diamond, which is trapped, yet free to move around within the space.
De Beers said the gemstone was discovered at one of its mines in either Africa or Canada, but the exact origins can’t be pinpointed.
It arrived at the De Beers Institute of Diamonds facility in Maidenhead, England, in November last year, where it was verified to be a natural occurring stone.
Initial conclusions from the Institute’s experts suggest that an intermediate layer of poor-quality diamond etched away during its travel to the surface of the Earth, leaving only the better-quality material: the outer diamond and the core.
“The ‘Beating Heart’ is a remarkable example of what can happen on the natural diamond journey from formation to discovery,” Jamie Clark, Head of Global Operations at De Beers Institute of Diamonds, said in the statement.
Now registered on De Beers’ Tracr blockchain platform, which certifies a diamond’s provenance and production journey, the “Beating Heart” will be kept in its rough form for research and educational purposes.
Competitor Alrosa found a similar diamond in 2019, which was named “Matryoshka” after the famous Russian nesting dolls. The 0.62 carat gem, estimated to be over 800 million years old, resulted from one diamond growing inside another, according to Alrosa’s scientists.
De Beers has increased prices of small rough diamonds for the second consecutive sight as a combination of demand and supply factors continue to create a hot market for the category.
Prices for tiny stones rose by around 10% on average at this week’s trading session, with sharper advances in certain segments, customers and insiders estimated Monday. The changes were mainly for minus-7 sieve sizes, which weigh about 0.03 carats, across a range of qualities. De Beers was unavailable for comment.
The February sale runs this week from Monday to Friday in Gaborone, Botswana.
Rough under 0.75 carats became a sought-after asset in the second half of 2022 as melee demand from luxury brands strengthened and Indian manufacturers needed cheaper material to fill factories amid thin profit margins. In addition, Western sanctions on Russian diamonds created a mixture of real and perceived shortages in those sizes, for which Alrosa is the biggest supplier. The trade is watching for potential further restrictions as the one-year anniversary of Russia’s invasion of Ukraine approaches.
“Are people preempting what the [new] measures might be on Russia? [The strong market] might have to do with that,” a rough-market participant told Rapaport News on condition of anonymity.
Last year, De Beers made only modest increases in the prices of smalls, even when the segment saw robust demand, a sightholder explained on condition of anonymity. The miner raised prices at last month’s sight by approximately 10% — alongside decreases in the slower, larger goods.
The fresh hikes caught many dealers by surprise, as they were expecting De Beers to monitor the Chinese recovery before making further price adjustments.
Confidence is the “fifth C” of the diamond sector and its role has rapidly gained increased importance at every touchpoint of a diamond’s journey. Customers, suppliers, financiers and end consumers all have a rightfully heightened demand of assurance when it comes to diamonds. With more than 130 years of experience as a leader in the industry, De Beers Group is dedicated to building and solidifying confidence within every touchpoint our diamonds reach. Designed to combine expertise with innovative technology in grading, De Beers Institute of Diamonds provides our industry with the very best in diamond verification with a range of products and services that provide confidence in product integrity, product knowledge and product assessment.
At the De Beers Institute of Diamonds, our grading is guided by three key principles:
Accuracy – Our laboratories use market leading instruments and proprietary technology to support our grading, providing the most accurate and consistent diamond appraisals.
Integrity – In using a ‘black box’ system – where diamonds are distributed in anonymous boxes so that each diamond is appraised fairly according only to its features – ensures the integrity of all our processes.
Consistency – Our team is built around some of the world’s most experienced graders, who undergo rigorous training, carrying the knowledge and expertise to evaluate every diamond accurately and consistently, wherever it was mined.
Every diamond we grade as part of our services is natural, untreated and from a recognized diamond producer.
We believe there is more to a diamond than its weight and appearance. We work only with natural diamonds, disclosed to us as compliant with the United Nations mandated World Diamond Council Kimberley Process – a foundational commitment to the modern diamond industry. Additionally, an assessment from De Beers Institute of Diamonds provides diamantaires with confidence in a report of each diamond’s 4Cs of carat, color, clarity and cut. Every diamond graded at De Beers Institute of Diamonds is given a unique inscription number, allowing the diamond details to be tracked and viewed on our website, for added peace of mind.
Every diamond we handle has benefited from our unrivalled range of accumulated expertise and exclusive proprietary technology – the most advanced diamond services and verification instruments in the trade.
Hardwiring our expertise into technology underpins our ability to give customers accurate, reliable and repeatable outcomes within our diamond grading services. Our technology leadership ensures our customers can have 100% trust in both the integrity and assessments of their diamonds, helping them in turn offer this priceless commodity to their own supply chain partners. This confidence is passed to the end consumer, providing both promise and security that their diamond has been on a journey filled with our guiding principles of transparency, accuracy and consistency.
Without the ability in instill confidence within the industry and directly the consumer, a diamond holds very little value. Empowering the industry with our expertise channeled into technology and grading allows De Beers to deliver the most reputable product on the market. Diamonds are so much more than just their unique beauty and De Beers Institute of Diamonds ensures their story remains as intact as their sparkle.
De Beers, the world’s top diamond producer by value, has once again increased the price of its smaller stones as sanctions on Alrosa, its Russian rival, have worsened a global shortage caused by two years of covid-related shutdowns.
The Anglo American unit had hiked prices by about 8% at its first sale this year, with the sharpest increases of up to 20% affecting small-scale roughs, as demand reached pre-pandemic levels.
Prices for these diamonds, which usually end up clustered around the solitaire stone in a ring, have soared since early April, when Alrosa was targeted by US sanctions related to Russia’s invasion of Ukraine.
Diamonds are one of Russia’s top ten non-energy exports by value, with shipments in 2021 totalling over $4.5 billion, and its state-owned diamond producer is responsible for about a third of global supply.
Unlike Alrosa, De Beers doesn’t produce much of diamonds used in lower-end jewellery usually found a chain stores such as Costco or Walmart which is creating increasing shortages as Alrosa’s ability to supply the market remains uncertain.
People familiar with the matter told Bloomberg that De Beers applied a 5% to 7% price increase this week in Botswana, where the company holds 10 sales each year in events known as sights.
Around 60 handpicked customers known as sightholders are given a black and yellow box each time. These contain plastic bags filled with stones, with the number of boxes and quality of diamonds depending on what the buyer and De Beers had agreed to in an annual allocation.
De Beers rises small diamonds price amid shortage Prices for small rough diamonds, the type that would end up clustered around the solitaire stone in a ring, are climbing.
Prices for small rough diamonds are climbing.
The miner increased the price of its rough diamonds throughout much of 2021 as it sought to recover from the first year of the pandemic when the industry came to a near halt.
The strategy, which applied to stones bigger than 1 carat, granted De Beers a steady recovery during the year, with prices gaining 23% in just over a year, parent company Anglo American said in a December presentation.
De Beers now only carries working inventory stocks and its mines are running at full tilt. There is little chance of material increases in supply before 2024, when a $2 billion underground expansion of its Venetia mine in South Africa is expected to be completed.
The diamond jewelry industry is going into the year with diamond supply at historically low levels, estimated by Bain & Company at 29 million carats in 2021. “Upstream inventories declined ~40%, driven by high demand and slow production recovery, and are near the minimal technical level,” the report stated.
De Beers’ rough prices spiked in the first half of 2021 as supply shortages coincided with buoyant diamond demand at the trade and retail levels.
The miner’s price index rose 14% during the six months, reflecting “tightness in inventories across the diamond value chain, as well as positive consumer demand for polished diamonds,” parent company Anglo American said Tuesday.
De Beers implemented price increases at its January, February and June sights, with an emphasis on the larger categories of rough. This brought prices back to pre-pandemic levels: The index for the first half was flat versus the same period of 2020, the company reported.
Sales volume at De Beers rose to 7.3 million carats in the second quarter from just 300,000 carats a year earlier during the peak of the coronavirus crisis. The average sales price advanced 13% to $135 per carat as demand shifted to higher-value rough.
“Consumer demand for polished diamonds continued to recover, leading to strong demand for rough diamonds from midstream cutting and polishing centers, despite the impact on capacity from the severe Covid-19 wave in India during April and May,” the miner said.
Meanwhile, production more than doubled to 8.2 million carats for the quarter versus 3.5 million carats last year, reflecting planned increases to meet the stronger rough demand, as well as the sharp impact of lockdowns in southern Africa in 2020.
With half of 2021 now over, De Beers was able to give a more specific production outlook for the full year, predicting output of 32 million to 33 million carats — compared with a previous plan of 32 million to 34 million carats. The company has already reduced its guidance for the year twice because of operational issues at mines.
“Most of the impact on production for the year as a whole is a result of the challenges we experienced earlier in the year, particularly with excessive rainfall in southern Africa, the Covid-19-related shutdown in Canada, and power supply disruptions in Botswana,” a De Beers spokesperson commented. “We still expect production in the second half of the year to be significantly above the 15.4 million carats produced in the first half of the year, however, and this will take us to the narrower guided range.”
In the second quarter, output in Botswana more than tripled to 5.7 million carats from 1.8 million carats a year before. Production in Namibia slipped 6% to 338,000 carats, as one of the company’s mining vessels underwent planned maintenance and another remained demobilized.
Output in South Africa more than doubled to 1.3 million carats from 555,000 because the company processed higher-grade ore at the Venetia mine. Canada’s production climbed 14% to 899,000 carats, mainly reflecting the comparison with last year’s slowdown.
De Beers’ rough prices spiked in the first half of 2021 as supply shortages coincided with buoyant diamond demand at the trade and retail levels.
The miner’s price index rose 14% during the six months, reflecting “tightness in inventories across the diamond value chain, as well as positive consumer demand for polished diamonds,” parent company Anglo American said Tuesday.
De Beers implemented price increases at its January, February and June sights, with an emphasis on the larger categories of rough. This brought prices back to pre-pandemic levels: The index for the first half was flat versus the same period of 2020, the company reported.
Sales volume at De Beers rose to 7.3 million carats in the second quarter from just 300,000 carats a year earlier during the peak of the coronavirus crisis. The average sales price advanced 13% to $135 per carat as demand shifted to higher-value rough.
“Consumer demand for polished diamonds continued to recover, leading to strong demand for rough diamonds from midstream cutting and polishing centers, despite the impact on capacity from the severe Covid-19 wave in India during April and May,” the miner said.
Meanwhile, production more than doubled to 8.2 million carats for the quarter versus 3.5 million carats last year, reflecting planned increases to meet the stronger rough demand, as well as the sharp impact of lockdowns in southern Africa in 2020.
With half of 2021 now over, De Beers was able to give a more specific production outlook for the full year, predicting output of 32 million to 33 million carats — compared with a previous plan of 32 million to 34 million carats. The company has already reduced its guidance for the year twice because of operational issues at mines.
“Most of the impact on production for the year as a whole is a result of the challenges we experienced earlier in the year, particularly with excessive rainfall in southern Africa, the Covid-19-related shutdown in Canada, and power supply disruptions in Botswana,” a De Beers spokesperson commented. “We still expect production in the second half of the year to be significantly above the 15.4 million carats produced in the first half of the year, however, and this will take us to the narrower guided range.”
In the second quarter, output in Botswana more than tripled to 5.7 million carats from 1.8 million carats a year before. Production in Namibia slipped 6% to 338,000 carats, as one of the company’s mining vessels underwent planned maintenance and another remained demobilized.
Output in South Africa more than doubled to 1.3 million carats from 555,000 because the company processed higher-grade ore at the Venetia mine. Canada’s production climbed 14% to 899,000 carats, mainly reflecting the comparison with last year’s slowdown.
Rough-diamond demand was robust at this week’s De Beers sight despite the ongoing Covid-19 crisis in India, customers reported.
Manufacturers snapped up the limited supply in anticipation of rough shortages, sources told Rapaport News. Sales will still be 10% to 25% lower than the previous cycle in March because of reduced availability, they estimated. That translates to a sight value of $330 million to $400 million.
“People are buying from the miners and the big sources, thinking that there will probably be tenders that will be canceled,” a sightholder said. “There is the perceived idea that there’s going to be a shortage in certain goods. People are as eager to buy rough as they were four weeks ago.”
De Beers is not offering any ex-plan goods — those over and above customers’ prearranged allocations — the sources added. The miner has fewer diamonds available for clients after reducing its inventories during a strong first quarter for the rough trade, when it sold 13.5 million carats against production of 7.2 million carats. It has suffered operational difficulties at some of its Botswana deposits, exacerbated by a temporary shutdown at its Gahcho Kué mine in Canada.
“If De Beers offered 20% more [goods at the sight], I think the market would eat it up,” a rough-sector insider commented.
Less manufacturing
While India’s diamond and jewelry sector has received permission to operate during the country’s several coronavirus wave, manufacturing levels have slumped by between 10% and 50% in the past month. This has resulted from capacity restrictions and absenteeism, with smaller sizes seeing a sharper downturn.
Companies that manufacture larger goods operate in factories with more space for social distancing and are able to retain workers by offering higher pay, a sightholder explained. Many employees who produce smaller stones have left Surat and returned to their hometowns for health reasons.
“My production is down by a little less than 10%, but for people who are in smalls, their production has been severely hit, and is probably down by more than 30%,” said an executive at a large-stone manufacturer.
In line with this, the market for large rough has survived better than the small-stone segment, sources explained.
“Anything in [0.75 carats] or up, it’s in big demand,” a customer noted. “You can sell whatever you want.”
Meanwhile, polished demand has strengthened as companies anticipate lower availability alongside steady retail sales. A backlog at the Gemological Institute of America (GIA) has also affected the supply situation, with the turnaround time standing at around a month for the Mumbai laboratory and a little more in Surat.
“Due to the supply scarcity, people are stocking [up on] some of the goods, so demand is high, and will remain strong for a month or so,” another manufacturer said.
India’s virus outbreak has seen activity shift to other global centers. Many large manufacturers relocated their buying teams to Dubai before travel restrictions went into effect, enabling them to continue obtaining rough for their factories, reported Trans Atlantic Gem Sales (TAGS), a tender house located in the emirate.
New contract
De Beers’ weeklong May sight, its fourth of the year, began on Monday, featuring viewings in Dubai, Antwerp and Tel Aviv. The session is also the first under a new supply contract that came into effect on April 1.
The agreement sees the miner offer proportionately more goods to manufacturers rather than dealers in an effort to limit the reselling of boxes. Sightholders expected sluggish rough trading on the secondary market this month as a result.
Certain assortments have also changed, with 8-grainer (2-carat) rough now forming part of a category of larger stones ranging from 2 carats upward, sightholders noted. The size was previously in a 4- to 8-grainer (1- to 2-carat) box, which will now become 4- to 6-grainers (1 to 1.50 carats).
“This was focused both on responding to sightholders’ commercial needs and ensuring we have the most coherent offering for beneficiation customers,” a De Beers spokesperson said.
Customers forecast stable pricing at the sight following successive increases from December to February.
Rough-diamond demand was robust at this week’s De Beers sight despite the ongoing Covid-19 crisis in India, customers reported.
Manufacturers snapped up the limited supply in anticipation of rough shortages, sources told Rapaport News. Sales will still be 10% to 25% lower than the previous cycle in March because of reduced availability, they estimated. That translates to a sight value of $330 million to $400 million.
“People are buying from the miners and the big sources, thinking that there will probably be tenders that will be canceled,” a sightholder said. “There is the perceived idea that there’s going to be a shortage in certain goods. People are as eager to buy rough as they were four weeks ago.”
De Beers is not offering any ex-plan goods — those over and above customers’ prearranged allocations — the sources added. The miner has fewer diamonds available for clients after reducing its inventories during a strong first quarter for the rough trade, when it sold 13.5 million carats against production of 7.2 million carats. It has suffered operational difficulties at some of its Botswana deposits, exacerbated by a temporary shutdown at its Gahcho Kué mine in Canada.
“If De Beers offered 20% more [goods at the sight], I think the market would eat it up,” a rough-sector insider commented.
Less manufacturing
While India’s diamond and jewelry sector has received permission to operate during the country’s several coronavirus wave, manufacturing levels have slumped by between 10% and 50% in the past month. This has resulted from capacity restrictions and absenteeism, with smaller sizes seeing a sharper downturn.
Companies that manufacture larger goods operate in factories with more space for social distancing and are able to retain workers by offering higher pay, a sightholder explained. Many employees who produce smaller stones have left Surat and returned to their hometowns for health reasons.
“My production is down by a little less than 10%, but for people who are in smalls, their production has been severely hit, and is probably down by more than 30%,” said an executive at a large-stone manufacturer.
In line with this, the market for large rough has survived better than the small-stone segment, sources explained.
“Anything in [0.75 carats] or up, it’s in big demand,” a customer noted. “You can sell whatever you want.”
Meanwhile, polished demand has strengthened as companies anticipate lower availability alongside steady retail sales. A backlog at the Gemological Institute of America (GIA) has also affected the supply situation, with the turnaround time standing at around a month for the Mumbai laboratory and a little more in Surat.
“Due to the supply scarcity, people are stocking [up on] some of the goods, so demand is high, and will remain strong for a month or so,” another manufacturer said.
India’s virus outbreak has seen activity shift to other global centers. Many large manufacturers relocated their buying teams to Dubai before travel restrictions went into effect, enabling them to continue obtaining rough for their factories, reported Trans Atlantic Gem Sales (TAGS), a tender house located in the emirate.
New contract
De Beers’ weeklong May sight, its fourth of the year, began on Monday, featuring viewings in Dubai, Antwerp and Tel Aviv. The session is also the first under a new supply contract that came into effect on April 1.
The agreement sees the miner offer proportionately more goods to manufacturers rather than dealers in an effort to limit the reselling of boxes. Sightholders expected sluggish rough trading on the secondary market this month as a result.
Certain assortments have also changed, with 8-grainer (2-carat) rough now forming part of a category of larger stones ranging from 2 carats upward, sightholders noted. The size was previously in a 4- to 8-grainer (1- to 2-carat) box, which will now become 4- to 6-grainers (1 to 1.50 carats).
“This was focused both on responding to sightholders’ commercial needs and ensuring we have the most coherent offering for beneficiation customers,” a De Beers spokesperson said.
Customers forecast stable pricing at the sight following successive increases from December to February.
