De Beers Profit Falls Amid Market Slump

De Beers’ profit dropped in the first half of the year as weak demand at the trade and consumer levels impacted diamond prices, the company said Thursday.

The rough market was subdued due to high inventories in both the midstream and the retail sector, as well as a slowdown in growth of consumer demand, the miner explained. The US-China tariff dispute, protests in Hong Kong and the strong US dollar hit retail performances outside the US, especially in China and the Gulf region. In the US, retailers’ store closures and reduction of stocks weighed on polished demand, creating a further negative effect for the rough business, De Beers added.

Earnings before interest, taxes, depreciation and amortization (EBITDA) slumped 27% to $518 million as a result of the impact on margins, the miner reported. Total underlying earnings fell 7% to $187 million. Revenue slid 17% to $2.65 billion, with rough-diamond sales decreasing 21% to $2.3 billion. Other revenues came from businesses such as Element Six, its industrial-diamond unit, and De Beers Jewellers, its high-end retail chain.

“The lower rough-diamond sales reflected higher-than-expected polished stocks at retailers and the midstream at the beginning of 2019, with overall midstream inventory levels continuing to be high throughout the first half,” De Beers noted.

De Beers’ rough-price index, measuring prices on a like-for-like basis, fell 4% for the period versus a year earlier. The average selling price declined 7% to $151 per carat, influenced by a change in the sales mix caused by the weaker conditions.

The company expects those challenges to continue in the short term, but also foresees an improvement as the industry reduces its inventory and consumer demand rises.

“Underlying GDP [gross domestic product] growth remains supportive of consumer-demand growth, and is expected to bring midstream and retailer stocks back to more normalized levels as we move into 2020, subject to an improving macroeconomic environment,” De Beers said.

Last week, De Beers reduced its production outlook following low demand, forecasting output of 31 million carats this year, whereas it had previously expected to recover 31 million to 33 million carats. Production fell 11% to 15.6 million carats during the first half, as the company chose not to increase mining levels at other deposits to compensate for a lull at the Venetia mine. Output at the site in South Africa has fallen amid its transition from open-pit to underground operations.

Source: DCLA

De Beers Profit Falls Amid Market Slump

De Beers’ profit dropped in the first half of the year as weak demand at the trade and consumer levels impacted diamond prices, the company said Thursday.

The rough market was subdued due to high inventories in both the midstream and the retail sector, as well as a slowdown in growth of consumer demand, the miner explained. The US-China tariff dispute, protests in Hong Kong and the strong US dollar hit retail performances outside the US, especially in China and the Gulf region. In the US, retailers’ store closures and reduction of stocks weighed on polished demand, creating a further negative effect for the rough business, De Beers added.

Earnings before interest, taxes, depreciation and amortization (EBITDA) slumped 27% to $518 million as a result of the impact on margins, the miner reported. Total underlying earnings fell 7% to $187 million. Revenue slid 17% to $2.65 billion, with rough-diamond sales decreasing 21% to $2.3 billion. Other revenues came from businesses such as Element Six, its industrial-diamond unit, and De Beers Jewellers, its high-end retail chain.

“The lower rough-diamond sales reflected higher-than-expected polished stocks at retailers and the midstream at the beginning of 2019, with overall midstream inventory levels continuing to be high throughout the first half,” De Beers noted.

De Beers’ rough-price index, measuring prices on a like-for-like basis, fell 4% for the period versus a year earlier. The average selling price declined 7% to $151 per carat, influenced by a change in the sales mix caused by the weaker conditions.

The company expects those challenges to continue in the short term, but also foresees an improvement as the industry reduces its inventory and consumer demand rises.

“Underlying GDP [gross domestic product] growth remains supportive of consumer-demand growth, and is expected to bring midstream and retailer stocks back to more normalized levels as we move into 2020, subject to an improving macroeconomic environment,” De Beers said.

Last week, De Beers reduced its production outlook following low demand, forecasting output of 31 million carats this year, whereas it had previously expected to recover 31 million to 33 million carats. Production fell 11% to 15.6 million carats during the first half, as the company chose not to increase mining levels at other deposits to compensate for a lull at the Venetia mine. Output at the site in South Africa has fallen amid its transition from open-pit to underground operations.

Source: DCLA

Don’t punish African diamond producing countries without cause, WFDB President says

In his first -ever blog, Ernest Blom, president of the World Federation of Diamond Bourses, argues that the Kimberley Process Certification Scheme (KPCS) is slow because one of the most hot potatoes is ignored.

The KPCS, he wrote,is one of the great accomplishments of the worldwide diamond community of the last two decades, as more than 99.5 percent of the diamonds produced fall under a certification regime.

On the question why the KPCS agenda is moving so slowly, Blom says there is an elephant in the room nobody wants to acknowledge. “Of course, consuming nations have the right to demand that the strongest possible control mechanisms to guarantee that the diamonds imported into their countries are not tainted by any form of abuse. The same is also true for producing nations. They are entitled to protect the interests of their natural resources, ” Blom wrote.

“So what should producers say – in the interest of their nation – when large retail companies make an announcement that certain countries’ production is not allowed to be sold through them?” he asked . “Any decision taken at the KP or elsewhere affects the entire diamond industry, from mining to the manufacturers and dealers as well as to the smallest retail shop, which affects the lives of tens of millions of people.”

“It should not come as a surprise to anyone in Southern Africa that the enthusiasm to comply with what is perceived as a new form of economic colonialism is pretty limited. When countries are asked to make rules which could hurt them immediately once agreed upon it is difficult to find common ground.”

“If KP Participants are faced with “prima facie” judgments by large corporations and feel the enormous commercial consequences in their supply chain – and this without any written rule or law – then one should not be surprised at their reluctance to have a rule adopted in a formal manner and included in the KP Core Document.” Blom continued and said that there should be a rule in the current definition of conflict diamonds that includes any systemic violence.

At the same time, the objective analysis of facts should be the cornerstone of verification of allegations, and “trial by media” cannot be part of that solution. “This is the elephant that the Indian KP Chair has to ride. If he can do that successfully and neutralize what is perceived as a real threat of becoming excluded, he will have accomplished what many have failed to achieve in the past 10 years. From the World Federation of Diamond Bourses, we wish Shri Alok Vardan Chaturvedi lots of luck in this major task.”

Source: DCLA

Don’t punish African diamond producing countries without cause, WFDB President says

In his first -ever blog, Ernest Blom, president of the World Federation of Diamond Bourses, argues that the Kimberley Process Certification Scheme (KPCS) is slow because one of the most hot potatoes is ignored.

The KPCS, he wrote,is one of the great accomplishments of the worldwide diamond community of the last two decades, as more than 99.5 percent of the diamonds produced fall under a certification regime.

On the question why the KPCS agenda is moving so slowly, Blom says there is an elephant in the room nobody wants to acknowledge. “Of course, consuming nations have the right to demand that the strongest possible control mechanisms to guarantee that the diamonds imported into their countries are not tainted by any form of abuse. The same is also true for producing nations. They are entitled to protect the interests of their natural resources, ” Blom wrote.

“So what should producers say – in the interest of their nation – when large retail companies make an announcement that certain countries’ production is not allowed to be sold through them?” he asked . “Any decision taken at the KP or elsewhere affects the entire diamond industry, from mining to the manufacturers and dealers as well as to the smallest retail shop, which affects the lives of tens of millions of people.”

“It should not come as a surprise to anyone in Southern Africa that the enthusiasm to comply with what is perceived as a new form of economic colonialism is pretty limited. When countries are asked to make rules which could hurt them immediately once agreed upon it is difficult to find common ground.”

“If KP Participants are faced with “prima facie” judgments by large corporations and feel the enormous commercial consequences in their supply chain – and this without any written rule or law – then one should not be surprised at their reluctance to have a rule adopted in a formal manner and included in the KP Core Document.” Blom continued and said that there should be a rule in the current definition of conflict diamonds that includes any systemic violence.

At the same time, the objective analysis of facts should be the cornerstone of verification of allegations, and “trial by media” cannot be part of that solution. “This is the elephant that the Indian KP Chair has to ride. If he can do that successfully and neutralize what is perceived as a real threat of becoming excluded, he will have accomplished what many have failed to achieve in the past 10 years. From the World Federation of Diamond Bourses, we wish Shri Alok Vardan Chaturvedi lots of luck in this major task.”

Source: DCLA

Tango Averages $1.4K/ct. at Rough Sale

Tango Mining sold a 19.87-carat rough diamond for $4,358 per carat, one of a number of high-value stones up for tender from its Oena project in South Africa.

The miner sold 230 stones totaling 531.82 carats from its May 9 to July 7 production. It achieved an average price of $1,382 per carat for rough at the sale.

The company also sold a 49.6-carat diamond for $2,561 per carat, a 16.65-carat rough for $2,126 per carat, and a 24.97-carat stone for $1,101 per carat.

In addition, Tango is conducting trial mining in Angola and an exploration project in Liberia.

Source: DCLA

Tango Averages $1.4K/ct. at Rough Sale

Tango Mining sold a 19.87-carat rough diamond for $4,358 per carat, one of a number of high-value stones up for tender from its Oena project in South Africa.

The miner sold 230 stones totaling 531.82 carats from its May 9 to July 7 production. It achieved an average price of $1,382 per carat for rough at the sale.

The company also sold a 49.6-carat diamond for $2,561 per carat, a 16.65-carat rough for $2,126 per carat, and a 24.97-carat stone for $1,101 per carat.

In addition, Tango is conducting trial mining in Angola and an exploration project in Liberia.

Source: DCLA

Belgium Trade Cuts Diamond-Research Funding

The Antwerp World Diamond Centre (AWDC) will no longer provide financial backing to the city’s diamond-technology unit, citing difficult conditions in the local industry.

“As a result of the high cost of labor in our country, almost the entirety of our diamond manufacturing has relocated abroad,” AWDC spokeswoman Margaux Donckier said Friday.

The AWDC established the Scientific and Technical Research Center for Diamond (WTOCD) in 1977 to support the Belgian diamond-manufacturing sector. The venture was created to improve Antwerp’s competitive position in the global industry, and to develop and implement products for the trade.

“The market for these high-quality machines in Antwerp continues to shrink,” Donckier noted. “They are also too hi-tech, and too expensive, for the majority of polishing units in low-wage countries.”

Those factors have put WTOCD in a difficult situation, Donckier explained. AWDC tried to work with the research center on Fenix, a new, fully automated diamond-polishing process that it believed would offer a competitive edge to Antwerp’s diamond industry. However, the technology, which had been set to debut last September, is still not ready.

“The technology has the potential to spark a revolution in diamond polishing, but at this point we recognize that additional investments are needed to ready the product for the market,” Donckier added, stressing that AWDC cannot afford to invest more given the state of the market.

During the course of its operations, WTOCD created synthetics-detection equipment, such as the M-Screen+ machine, which is sold by HRD Antwerp.

Source: DCLA