Diamond miners dented by liquidity crisis among India’s polishers

Diamond miners are feeling the pressure after a funding crunch in the world’s polishing hub dented sales of rough gemstones.

Since celebrity jeweller Nirav Modi fled India in 2018 accused of having defrauded a state bank of nearly $2bn, banks have sharply cut back lending to diamantaires, who cut, polish and trade the world’s diamonds.

“Bankers have blacklisted the jewellers industry,” said Shantibhai Patel, president of the Indian Bullion and Jewellers Association in Gujarat, the country’s diamond-cutting centre.

The squeeze has forced diamantaires to buy less from diamond producers such as De Beers, Rio Tinto and Gem Diamonds — which have seen sales and margins suffer as a result.

De Beers is on course to report its worst annual sales in at least four years. In response, the world’s largest producer reduced prices for its rough diamonds by 5 per cent last month at its November sale, the biggest discount in years, Bloomberg reported. De Beers declined to comment on its pricing.

Across the sector, rough diamond prices have fallen 15 per cent since last November, according to Polished Prices. Industry experts say a further 10-15 per cent drop would push some smaller producers to file for bankruptcy.

“It’s a liquidity crisis that’s affecting the middle of the pipeline,” said Edward Sterck, an analyst at BMO Capital Markets. “Diamond manufacturers can’t afford to pay rough diamond prices . . . It’s a function of necessity that prices have come down.”

Diamantaires — 90 per cent of which are based in India — buy rough diamonds from producers such as De Beers that they then cut with lasers and polish for use in jewellery.

The flight of Mr Modi, whose clients included actress Kate Winslet, prompted banks to tighten up lending terms for manufacturers. Bank credit to the diamond industry, of which Indian companies receive about four-fifths, fell 20 per cent to $8bn this year, according to WWW International Diamond Consultants.

As a result, diamond cutters are working through existing stocks rather than buying on the global market. According to India’s Gem and Jewellery Export Promotion Council, imports of rough diamonds into the country fell 22 per cent year over year to $7.3bn between April and October.

This has struck diamond mining companies hard. Stuart Brown, chief executive at Toronto-based Mountain Province Diamonds, said the rough stone market was “challenging” in its third-quarter results.

Mid-sized producers including Canada’s Lucara Diamond and the UK’s Petra Diamonds all reported lower prices for their diamonds in the latest quarter. Lucara reported a selling price of $390 a carat, a 13 per cent drop from last year and a steep fall from 2014, when gems sold for $644 a carat. Dire market conditions drove Quebec-based Stornoway Diamond into bankruptcy in September.

The diamond industry differs from other commodities given the large influence of the two largest producers on pricing, and the fact that diamonds vary in size, quality and colour. De Beers is a “price setter” that offers uncut stones to traders for fixed prices and quantities at sales, known as “sights”.

Production cuts and concessions, including discounts and flexibility to return stones, have provided some relief to De Beers and its customers. Sales rose last month but were still below $400m — the lowest in a November sight on record.

Mr Patel welcomed the Anglo American-owned company’s price cut, but expected little uplift in the foreseeable future. “There’s no work,” he said. “For one year, one and a half years, we’re not expecting any bullish trends.”

But Colin Shah, managing director of manufacturer Kama Schachter, is hopeful that the worst was over for diamantaires. He said that manufacturers were adjusting to the tougher norms in place after the Modi scandal, which could get liquidity flowing again.

“There’s much more [scrutiny] than there used to be,” he said, referring to banks’ lending practices. “Inventories have come down, everyone has made their business models leaner . . . I think the second half of 2020 will be better.”

Industry executives point to tightening supply over the next few years that will help restore diamonds’ key feature: rarity. Rio Tinto’s Argyle mine, which outputs 90 per cent of the world’s valuable pink diamonds, is set to close next year.

Meanwhile, retail demand for diamonds has been robust, particularly in the US where spending on diamond jewellery grew 4.5 per cent to $36bn last year. French luxury group LVMH’s $16.6bn acquisition of Tiffany, agreed last week, was seen by analysts as a vote of confidence in long-term consumer demand for diamond jewellery.

But other industry figures say more drastic action by diamond mining companies is needed to help bedraggled manufacturers. Martin Rapaport, founder of the world’s largest diamond trading platform, said the price cut was insufficient. “It’s not enough to recapitalise the industry,” he said.

“They need to drop prices as much as 50 per cent to return liquidity to the market. It’s too little too late.”

Source: DCLA

Diamond miners dented by liquidity crisis among India’s polishers

Diamond miners are feeling the pressure after a funding crunch in the world’s polishing hub dented sales of rough gemstones.

Since celebrity jeweller Nirav Modi fled India in 2018 accused of having defrauded a state bank of nearly $2bn, banks have sharply cut back lending to diamantaires, who cut, polish and trade the world’s diamonds.

“Bankers have blacklisted the jewellers industry,” said Shantibhai Patel, president of the Indian Bullion and Jewellers Association in Gujarat, the country’s diamond-cutting centre.

The squeeze has forced diamantaires to buy less from diamond producers such as De Beers, Rio Tinto and Gem Diamonds — which have seen sales and margins suffer as a result.

De Beers is on course to report its worst annual sales in at least four years. In response, the world’s largest producer reduced prices for its rough diamonds by 5 per cent last month at its November sale, the biggest discount in years, Bloomberg reported. De Beers declined to comment on its pricing.

Across the sector, rough diamond prices have fallen 15 per cent since last November, according to Polished Prices. Industry experts say a further 10-15 per cent drop would push some smaller producers to file for bankruptcy.

“It’s a liquidity crisis that’s affecting the middle of the pipeline,” said Edward Sterck, an analyst at BMO Capital Markets. “Diamond manufacturers can’t afford to pay rough diamond prices . . . It’s a function of necessity that prices have come down.”

Diamantaires — 90 per cent of which are based in India — buy rough diamonds from producers such as De Beers that they then cut with lasers and polish for use in jewellery.

The flight of Mr Modi, whose clients included actress Kate Winslet, prompted banks to tighten up lending terms for manufacturers. Bank credit to the diamond industry, of which Indian companies receive about four-fifths, fell 20 per cent to $8bn this year, according to WWW International Diamond Consultants.

As a result, diamond cutters are working through existing stocks rather than buying on the global market. According to India’s Gem and Jewellery Export Promotion Council, imports of rough diamonds into the country fell 22 per cent year over year to $7.3bn between April and October.

This has struck diamond mining companies hard. Stuart Brown, chief executive at Toronto-based Mountain Province Diamonds, said the rough stone market was “challenging” in its third-quarter results.

Mid-sized producers including Canada’s Lucara Diamond and the UK’s Petra Diamonds all reported lower prices for their diamonds in the latest quarter. Lucara reported a selling price of $390 a carat, a 13 per cent drop from last year and a steep fall from 2014, when gems sold for $644 a carat. Dire market conditions drove Quebec-based Stornoway Diamond into bankruptcy in September.

The diamond industry differs from other commodities given the large influence of the two largest producers on pricing, and the fact that diamonds vary in size, quality and colour. De Beers is a “price setter” that offers uncut stones to traders for fixed prices and quantities at sales, known as “sights”.

Production cuts and concessions, including discounts and flexibility to return stones, have provided some relief to De Beers and its customers. Sales rose last month but were still below $400m — the lowest in a November sight on record.

Mr Patel welcomed the Anglo American-owned company’s price cut, but expected little uplift in the foreseeable future. “There’s no work,” he said. “For one year, one and a half years, we’re not expecting any bullish trends.”

But Colin Shah, managing director of manufacturer Kama Schachter, is hopeful that the worst was over for diamantaires. He said that manufacturers were adjusting to the tougher norms in place after the Modi scandal, which could get liquidity flowing again.

“There’s much more [scrutiny] than there used to be,” he said, referring to banks’ lending practices. “Inventories have come down, everyone has made their business models leaner . . . I think the second half of 2020 will be better.”

Industry executives point to tightening supply over the next few years that will help restore diamonds’ key feature: rarity. Rio Tinto’s Argyle mine, which outputs 90 per cent of the world’s valuable pink diamonds, is set to close next year.

Meanwhile, retail demand for diamonds has been robust, particularly in the US where spending on diamond jewellery grew 4.5 per cent to $36bn last year. French luxury group LVMH’s $16.6bn acquisition of Tiffany, agreed last week, was seen by analysts as a vote of confidence in long-term consumer demand for diamond jewellery.

But other industry figures say more drastic action by diamond mining companies is needed to help bedraggled manufacturers. Martin Rapaport, founder of the world’s largest diamond trading platform, said the price cut was insufficient. “It’s not enough to recapitalise the industry,” he said.

“They need to drop prices as much as 50 per cent to return liquidity to the market. It’s too little too late.”

Source: DCLA

Sarine Joins Race to Buy HRD Antwerp

Sarine Technologies has entered the running to acquire HRD Antwerp, according to two sources close to the sale process.

The Israel-based diamond-technology company has registered its interest in buying the Belgian laboratory, as have two previous heads of HRD, the two anonymous sources told Rapaport News.

Peter Meeus, who ran the organization between 1999 and 2005, was one of the first candidates be linked to a potential bid around a month ago. He is now joined by Serge Couvreur, who served as HRD’s general manager from 2013 to 2014, as well as by Sarine. The International Gemological Institute (IGI) also entered a bid earlier this year, as reported by Rapaport News in early November, but has since pulled out, the sources confirmed. The situation is changing constantly, another source pointed out.

Sarine’s move could be seen as part of its increased focus on grading and other downstream activities. While its main business is providing diamond-mapping equipment to manufacturers, the polished-grading sector offers considerable revenue opportunities and margins, Sarine noted last month.

Potential buyers of HRD have until next Tuesday to submit a final bid with a proposed price, one of the sources added.

HRD and the Antwerp World Diamond Centre, which owns the lab, declined to comment, as did the three bidders and IGI.

Source: DCLA

Sarine Joins Race to Buy HRD Antwerp

Sarine Technologies has entered the running to acquire HRD Antwerp, according to two sources close to the sale process.

The Israel-based diamond-technology company has registered its interest in buying the Belgian laboratory, as have two previous heads of HRD, the two anonymous sources told Rapaport News.

Peter Meeus, who ran the organization between 1999 and 2005, was one of the first candidates be linked to a potential bid around a month ago. He is now joined by Serge Couvreur, who served as HRD’s general manager from 2013 to 2014, as well as by Sarine. The International Gemological Institute (IGI) also entered a bid earlier this year, as reported by Rapaport News in early November, but has since pulled out, the sources confirmed. The situation is changing constantly, another source pointed out.

Sarine’s move could be seen as part of its increased focus on grading and other downstream activities. While its main business is providing diamond-mapping equipment to manufacturers, the polished-grading sector offers considerable revenue opportunities and margins, Sarine noted last month.

Potential buyers of HRD have until next Tuesday to submit a final bid with a proposed price, one of the sources added.

HRD and the Antwerp World Diamond Centre, which owns the lab, declined to comment, as did the three bidders and IGI.

Source: DCLA

Bespoke Certified Diamond Jewellery Insurance launches in Australia

CDI combines superior knowledge in the insurance and diamond industries to create a market leading product that will provide you with the right cover at the right price.

Like you, we treasure diamonds and believe they deserve the best worldwide cover should anything happen to them.

It’s why we offer a bespoke insurance policy only for certified diamond jewellery.

Specify your single item or items, and let us do the rest. Fill in your details online, register your diamond and receive instant protection against damage, loss or theft. Alternatively, give us a call and we can get the quotation process moving for you.

Your policy is underwritten at Lloyd’s of London, the oldest and most prestigious name in insurance.

And our Worldwide Cover ensures you are covered anywhere in the world for trips up to 30 days.

Our Certified Diamond Insurance team is based here in Australia and are available to help with any insurance questions you may have.

Also, so your diamonds remain as fabulous as the day you got them, we offer yearly complimentary health checks and cleans.

It’s all part of our dedicated service to keep your diamonds in their best shape.

Value Assurance
We combine superior knowledge in the diamond and insurance industries to create market-leading cover at the right price.

Accurate Claims
Your claim is overseen by diamond experts and vetted by a leading diamond laboratory, ensuring your replacement is of the same quality.

World-class Cover
Your insurance is underwritten by certain underwriters at Lloyd’s. Lloyd’s is the world’s specialist insurance and reinsurance market

Identification Recovery
Since your diamond is certified, we’ll also register and ID your diamonds, increasing the possibility of recovering them.

Source: Certified Diamond Insurance

Bespoke Certified Diamond Jewellery Insurance launches in Australia

CDI combines superior knowledge in the insurance and diamond industries to create a market leading product that will provide you with the right cover at the right price.

Like you, we treasure diamonds and believe they deserve the best worldwide cover should anything happen to them.

It’s why we offer a bespoke insurance policy only for certified diamond jewellery.

Specify your single item or items, and let us do the rest. Fill in your details online, register your diamond and receive instant protection against damage, loss or theft. Alternatively, give us a call and we can get the quotation process moving for you.

Your policy is underwritten at Lloyd’s of London, the oldest and most prestigious name in insurance.

And our Worldwide Cover ensures you are covered anywhere in the world for trips up to 30 days.

Our Certified Diamond Insurance team is based here in Australia and are available to help with any insurance questions you may have.

Also, so your diamonds remain as fabulous as the day you got them, we offer yearly complimentary health checks and cleans.

It’s all part of our dedicated service to keep your diamonds in their best shape.

Value Assurance
We combine superior knowledge in the diamond and insurance industries to create market-leading cover at the right price.

Accurate Claims
Your claim is overseen by diamond experts and vetted by a leading diamond laboratory, ensuring your replacement is of the same quality.

World-class Cover
Your insurance is underwritten by certain underwriters at Lloyd’s. Lloyd’s is the world’s specialist insurance and reinsurance market

Identification Recovery
Since your diamond is certified, we’ll also register and ID your diamonds, increasing the possibility of recovering them.

Source: Certified Diamond Insurance

Hong Kong Retail Sales Plunge

Sales of jewelry and other luxury items in Hong Kong slid in October, marking the second-highest monthly decline on record as protests in the municipality dented consumer sentiment.

Revenue from jewelry, watches, clocks and other valuable gifts fell 43% year on year to HKD 3.92 billion ($500.2 million) during the month, the municipality’s Census and Statistics Department reported Monday. . Sales across all retail categories slipped 24% to HKD 30.12 billion ($3.85 billion).

Demonstrations against an extradition bill have been ongoing since June, interfering with retail sales and hitting local consumer sentiment and tourism. Although the bill has been scrapped, violence in the municipality has continued.

“[Total] retail sales continued to plunge in October, and showed the largest year-on-year decline for a single month on record, as the local social incidents…depressed consumption sentiment and severely disrupted tourism and consumption-related activities,” a government spokesperson noted.

August showed the highest decline for jewelry since the Census and Statistics Department began publishing results in 2005. While January was the only month this year to note an increase, leading to a nine-month consecutive decline, sales during August, September and October each fell more than 40%.

The situation has led to a sharp drop in travelers from China and abroad, as well as weakened local purchasing. Tourism in Hong Kong was down 44% to 3.3 million visitors in October, the Hong Kong Tourism Board reported. Of those, 2.5 million came from mainland China, 46% fewer than the same period last year.

The government expects weakness in the market to continue as conditions persist, stressing that the market would likely not improve until the unrest subsided.

“Ending the violence in the local social incidents and restoring social order are crucial to the creation of an environment for the retail business to recover,” the spokesperson added, noting the government would continue to monitor the situation’s repercussions on both the municipality’s labor market and the overall economy.

In the first 10 months of the year, retail sales of jewelry, watches, clocks and other valuable gifts decreased 19% to HKD 57.67 billion ($7.37 billion). Sales in all retail categories for the January-to-October period fell 9% to HKD 365.12 billion ($46.6 billion).

Source: DCLA