Dominion Diamond sues partner in Diavik mine

Canada’s Dominion Diamond Mines is suing Rio Tinto’s subsidiary DDMI, its associate in the iconic Diavik mine, for alleged breach of contract and acting against the best interests of the partnership.

The lawsuit, filed on Tuesday in the Supreme Court of British Columbia, alleges that Diavik Diamond Mines, which owns 60% of Diavik, has operated the mine in a manner that shows “willful misconduct and gross negligence.”

Rio’s subsidiary runs the Canadian Artic diamond mine, but takes regular payments from Dominion to cover the corresponding 40% share of the costs. The partners then divide up the diamonds produced at Diavik and sell them separately.

“DDMI has continued to maintain full operations at the Diavik mine without taking into account the disruptions to the diamond industry caused by the covid-19 and, in particular, without taking into account Dominion’s circumstances,” the suit alleges.

“DDMI has done so knowing that Dominion has no ability to pay for such cash calls because it cannot materially monetize diamond inventories to pay for them,” it notes.

DOMINION DIAMOND, WHICH IS FIGHTING BANKRUPTCY, ALLEGES DDMI IS MANAGING DIAVIK TO THE BENEFIT OF ITS MAJORITY OWNER, RIO TINTO

A spokesperson for Rio Tinto told mining.com the company would be “vigorously” defending Dominion’s “baseless claims” in court.

“We regret Dominion filing what are baseless claims against us,” the source said. “We remain focused on managing the mine safely just as we continue to protect Diavik’s interests in Dominion’s insolvency proceedings and the jobs of the more than 1,120 people who work at Diavik.”

The two companies are already tangled up in separate legal proceedings relating to Dominion filing for creditor protection in April.

The diamond miner said at the time that the covid-19 pandemic had had a “devastating impact” on the global diamond mining industry, particularly in the company.

Dominion signed in May a letter of intent to sell its stake in Diavik mine, in the Northwest Territories, as well as the neighbouring Ekati mine to a firm controlled by its parent company, the Washington Companies, for $126 million.

Under the deal, which is subject to a court-supervised bidding process, the privately held Montana-based conglomerate would also provide Dominion with up to $84 million in short-term debtor-in-possession financing.

The Toronto-based diamond miner was hoping to reach an agreement with Rio Tinto on Diavik, which is scheduled to close in 2025, with cleanup costs estimated at $365.3 million.

The global miner, however, said on Monday it did not intend to take full control of the Canadian Arctic diamond mine.

Shattered dreams
The coronavirus pandemic squashed diamond miners’ dawning hopes of a recovery in a sector already reeling from weak prices and demand since late 2018.

De Beers, the world’s largest producer by value, cut 2020 production guidance by a fifth last month after earlier cancelling its April sales event.

Russia’s Alrosa, the world’s top diamond producer by output, saw sales for rough and polished diamonds drop to $15.6 million. The figure stood in stark contrast to the $152.8 million the diamond miner fetched in March and the $405 million in January.

DOMINION IS SEEKING DAMAGES, COSTS, AND A RULING THAT THE JOINT VENTURE AGREEMENT HAS BEEN BROKEN. NO CASH VALUE WAS GIVEN IN THE FILING

Lucara Diamond, another Canadian company, posted earlier this month a net loss of $3.2 million, or $0.01 a share, for the first three months of the year.

The figure was in sharp contrast with the $7.4 million in net income, or $0.02 in earning per share the miner reported in the same period last year.

South Africa’s Petra Diamonds recently delayed interest payments to borrow $21 million in new debt, a crucial move to keep the company afloat.

Investment banks are increasingly reluctant to extend credit to diamond producers, as inventory is not being sold and defaults are possible, analysts have warned.

“We are concerned about an oversupply of rough diamonds following the reopening of economies, as a lot of inventory could potentially be flooded into the system and the market might not be able to absorb all of it, resulting in increased pricing pressure,” Citi said in an early May note.

Source: DCLA

Dominion Diamond sues partner in Diavik mine

Canada’s Dominion Diamond Mines is suing Rio Tinto’s subsidiary DDMI, its associate in the iconic Diavik mine, for alleged breach of contract and acting against the best interests of the partnership.

The lawsuit, filed on Tuesday in the Supreme Court of British Columbia, alleges that Diavik Diamond Mines, which owns 60% of Diavik, has operated the mine in a manner that shows “willful misconduct and gross negligence.”

Rio’s subsidiary runs the Canadian Artic diamond mine, but takes regular payments from Dominion to cover the corresponding 40% share of the costs. The partners then divide up the diamonds produced at Diavik and sell them separately.

“DDMI has continued to maintain full operations at the Diavik mine without taking into account the disruptions to the diamond industry caused by the covid-19 and, in particular, without taking into account Dominion’s circumstances,” the suit alleges.

“DDMI has done so knowing that Dominion has no ability to pay for such cash calls because it cannot materially monetize diamond inventories to pay for them,” it notes.

DOMINION DIAMOND, WHICH IS FIGHTING BANKRUPTCY, ALLEGES DDMI IS MANAGING DIAVIK TO THE BENEFIT OF ITS MAJORITY OWNER, RIO TINTO

A spokesperson for Rio Tinto told mining.com the company would be “vigorously” defending Dominion’s “baseless claims” in court.

“We regret Dominion filing what are baseless claims against us,” the source said. “We remain focused on managing the mine safely just as we continue to protect Diavik’s interests in Dominion’s insolvency proceedings and the jobs of the more than 1,120 people who work at Diavik.”

The two companies are already tangled up in separate legal proceedings relating to Dominion filing for creditor protection in April.

The diamond miner said at the time that the covid-19 pandemic had had a “devastating impact” on the global diamond mining industry, particularly in the company.

Dominion signed in May a letter of intent to sell its stake in Diavik mine, in the Northwest Territories, as well as the neighbouring Ekati mine to a firm controlled by its parent company, the Washington Companies, for $126 million.

Under the deal, which is subject to a court-supervised bidding process, the privately held Montana-based conglomerate would also provide Dominion with up to $84 million in short-term debtor-in-possession financing.

The Toronto-based diamond miner was hoping to reach an agreement with Rio Tinto on Diavik, which is scheduled to close in 2025, with cleanup costs estimated at $365.3 million.

The global miner, however, said on Monday it did not intend to take full control of the Canadian Arctic diamond mine.

Shattered dreams
The coronavirus pandemic squashed diamond miners’ dawning hopes of a recovery in a sector already reeling from weak prices and demand since late 2018.

De Beers, the world’s largest producer by value, cut 2020 production guidance by a fifth last month after earlier cancelling its April sales event.

Russia’s Alrosa, the world’s top diamond producer by output, saw sales for rough and polished diamonds drop to $15.6 million. The figure stood in stark contrast to the $152.8 million the diamond miner fetched in March and the $405 million in January.

DOMINION IS SEEKING DAMAGES, COSTS, AND A RULING THAT THE JOINT VENTURE AGREEMENT HAS BEEN BROKEN. NO CASH VALUE WAS GIVEN IN THE FILING

Lucara Diamond, another Canadian company, posted earlier this month a net loss of $3.2 million, or $0.01 a share, for the first three months of the year.

The figure was in sharp contrast with the $7.4 million in net income, or $0.02 in earning per share the miner reported in the same period last year.

South Africa’s Petra Diamonds recently delayed interest payments to borrow $21 million in new debt, a crucial move to keep the company afloat.

Investment banks are increasingly reluctant to extend credit to diamond producers, as inventory is not being sold and defaults are possible, analysts have warned.

“We are concerned about an oversupply of rough diamonds following the reopening of economies, as a lot of inventory could potentially be flooded into the system and the market might not be able to absorb all of it, resulting in increased pricing pressure,” Citi said in an early May note.

Source: DCLA

A Diamond’s Secret Inner Light

During this unprecedented time, there has never been a more meaningful moment to overcome challenges, to make a connection to products that are symbolic, and to maintain a positive outlook. That’s the idea behind the movement to promote fluorescent diamonds, a naturally occurring characteristic that occurs in 25–35% of diamonds.

Simply put, fluorescence is the presence of nitrogen in carbon that, when exposed to UV, or black, light, emits an inner glow, primarily blue in color. In the past, the fine jewelry industry misjudged these naturally occurring characteristics as flaws and a reason to discount the gems using milkiness as the main argument. But milky fluorescent diamonds are extremely rare, and the vast majority of fluorescent diamonds are not milky.

In fact, fluorescence is a valuable identifying feature of natural diamonds and can add to the aesthetic beauty of the stones. HRD Antwerp, a European authority in diamond certification, conducted a study in 2018 and found that fluorescence, under normal conditions and even when outdoors, has a positive influence on the color of diamonds. And jewelers are taking advantage of optical attributes, specifically glow-in-the-dark characteristics, for their designs. You won’t see the underlying pattern until the right conditions are met—a secret that the consumer may choose to share with others, or not.

Rebecca Foerster, president of the Alrosa, USA Inc., an affiliate of the world’s largest diamond mine, Russia-based Alrosa Group of Companies, is on the forefront of changing the industry’s perception of fluorescence. The company is developing a new line of fluorescent diamonds in commercial quantities, launching a brand.

“It’s a new story to tell, a new customer experience, and a business opportunity,” says Foerster, adding that Alrosa’s consumer studies reveal the majority of respondents said they would be willing to pay premium prices for fluorescent stones. “Our values may realign, our priorities may shift, and what better time to apply this same kind of thinking and perspective to diamonds? We need today’s consumer to find new ways to connect to natural diamonds.”

One might question whether promoting fluorescent diamonds during a pandemic is a viable opportunity. However, historically, diamonds do well in times of crisis, as people turn to more symbolic and emotional purchases. And the concept of inner light certainly resonates in a time of darkness.

The venture is also supported by ongoing science and gemological research on fluorescence. Jason Quick, executive director of American Gem Society Laboratories, explains: “One of the ways we like to think about fluorescence is to compare with fancy color diamonds; both phenomena are due to very interesting optical centers within the crystal lattice that absorb or interact with light at different wavelengths. Is a fancy vivid pink diamond due to something that went wrong during its natural formation? Or is it due to a natural process that went amazingly, beautifully right? Likewise, fluorescence can also be viewed and appreciated as a cool natural phenomenon adding character and dimension to the diamond.”

As the industry grapples with the current pandemic, Alrosa believes fluorescence is the way of the future. “We believe fluorescence is relevant, especially during what we are experiencing today,” says Foerster. “We must all look inside ourselves and find our inner light, for positive energy and moving forward.”

Source: DCLA

A Diamond’s Secret Inner Light

During this unprecedented time, there has never been a more meaningful moment to overcome challenges, to make a connection to products that are symbolic, and to maintain a positive outlook. That’s the idea behind the movement to promote fluorescent diamonds, a naturally occurring characteristic that occurs in 25–35% of diamonds.

Simply put, fluorescence is the presence of nitrogen in carbon that, when exposed to UV, or black, light, emits an inner glow, primarily blue in color. In the past, the fine jewelry industry misjudged these naturally occurring characteristics as flaws and a reason to discount the gems using milkiness as the main argument. But milky fluorescent diamonds are extremely rare, and the vast majority of fluorescent diamonds are not milky.

In fact, fluorescence is a valuable identifying feature of natural diamonds and can add to the aesthetic beauty of the stones. HRD Antwerp, a European authority in diamond certification, conducted a study in 2018 and found that fluorescence, under normal conditions and even when outdoors, has a positive influence on the color of diamonds. And jewelers are taking advantage of optical attributes, specifically glow-in-the-dark characteristics, for their designs. You won’t see the underlying pattern until the right conditions are met—a secret that the consumer may choose to share with others, or not.

Rebecca Foerster, president of the Alrosa, USA Inc., an affiliate of the world’s largest diamond mine, Russia-based Alrosa Group of Companies, is on the forefront of changing the industry’s perception of fluorescence. The company is developing a new line of fluorescent diamonds in commercial quantities, launching a brand.

“It’s a new story to tell, a new customer experience, and a business opportunity,” says Foerster, adding that Alrosa’s consumer studies reveal the majority of respondents said they would be willing to pay premium prices for fluorescent stones. “Our values may realign, our priorities may shift, and what better time to apply this same kind of thinking and perspective to diamonds? We need today’s consumer to find new ways to connect to natural diamonds.”

One might question whether promoting fluorescent diamonds during a pandemic is a viable opportunity. However, historically, diamonds do well in times of crisis, as people turn to more symbolic and emotional purchases. And the concept of inner light certainly resonates in a time of darkness.

The venture is also supported by ongoing science and gemological research on fluorescence. Jason Quick, executive director of American Gem Society Laboratories, explains: “One of the ways we like to think about fluorescence is to compare with fancy color diamonds; both phenomena are due to very interesting optical centers within the crystal lattice that absorb or interact with light at different wavelengths. Is a fancy vivid pink diamond due to something that went wrong during its natural formation? Or is it due to a natural process that went amazingly, beautifully right? Likewise, fluorescence can also be viewed and appreciated as a cool natural phenomenon adding character and dimension to the diamond.”

As the industry grapples with the current pandemic, Alrosa believes fluorescence is the way of the future. “We believe fluorescence is relevant, especially during what we are experiencing today,” says Foerster. “We must all look inside ourselves and find our inner light, for positive energy and moving forward.”

Source: DCLA

Natural Diamond Council makes marketing push

The Diamond Producers’ Association (DPA), established only five years ago by a coalition of diamond miners including De Beers and Alrosa, has relaunched as the Natural Diamond Council.

In addition to continuing to advertise natural diamonds as the DPA did previously, the council is also hoping to reach younger consumers by producing catchy editorial content on trends and innovations in diamond jewelry and the heritage of natural diamonds.

The rebranding comes at a difficult time for the diamond sector, with the economic fallout from the coronavirus pandemic depressing demand and prices.

“The current economic climate creates unprecedented challenges for the luxury industry. But, as the climate improves, natural diamonds will connect stronger than ever before,” said Natural Diamond Council CEO, David Kellie in a release. “Consumers will have a greater respect for all things natural and seek brands that have an honest mission to be truly sustainable. They’ll be purchasing luxury goods with a greater meaning, particularly those celebrating connections between friends and loved ones. We need to speak to the younger audience in a different way and we’re delighted to have brought in a number of partners that will contribute to the new world of natural diamonds we’re creating.”

The website will offer coverage under six categories: Epic Diamonds, Hollywood & Pop Culture, Love & Diamonds, Style & Innovation, Diamonds 101 and Inside the Diamond World. The council has also started a new, biannual trend report written by style experts, forecasting diamond jewelry trends, and incorporating styling tips.

In addition, the DPA’s Real is Rare, Real is a Diamond campaign will be replaced with the council’s new branding: “Only Natural Diamonds” (OND).

“Our new digital platforms will inspire and inform consumers globally about the values and heritage of natural diamonds, as well as promoting the significant innovation happening throughout the world of diamond jewelry,” added NDC’s managing director, Kristina Buckley Kayel. “The younger audience is clearly engaged and inspired when we present ourselves with authority in the digital world. It’s our aim to be number one across all digital platforms in our industry and our ambitious plans reflect these goals.”

The Natural Diamond Council will also aim to educate consumers on the sustainability and ethical practices of diamond producers, as well as everything they need to know when buying diamond jewelry.

In a release, the organization said the relaunch reflects the collective commitment of its members, Alrosa, De Beers, Dominion Diamonds, Lucara Diamond, Petra Diamonds, Murowa Diamonds, and Rio Tinto, to the growth of the industry beyond the current economic crisis.

“Our mission is to educate consumers on the industry and positive social contribution diamonds make to the world today,” said Stephen Lussier, Chairman of the NDC. “Our members are committed to these goals and the launch of the NDC marks an exciting step on this path.”

Visit www.naturaldiamonds.com for more information.

Source: DCLA

Natural Diamond Council makes marketing push

The Diamond Producers’ Association (DPA), established only five years ago by a coalition of diamond miners including De Beers and Alrosa, has relaunched as the Natural Diamond Council.

In addition to continuing to advertise natural diamonds as the DPA did previously, the council is also hoping to reach younger consumers by producing catchy editorial content on trends and innovations in diamond jewelry and the heritage of natural diamonds.

The rebranding comes at a difficult time for the diamond sector, with the economic fallout from the coronavirus pandemic depressing demand and prices.

“The current economic climate creates unprecedented challenges for the luxury industry. But, as the climate improves, natural diamonds will connect stronger than ever before,” said Natural Diamond Council CEO, David Kellie in a release. “Consumers will have a greater respect for all things natural and seek brands that have an honest mission to be truly sustainable. They’ll be purchasing luxury goods with a greater meaning, particularly those celebrating connections between friends and loved ones. We need to speak to the younger audience in a different way and we’re delighted to have brought in a number of partners that will contribute to the new world of natural diamonds we’re creating.”

The website will offer coverage under six categories: Epic Diamonds, Hollywood & Pop Culture, Love & Diamonds, Style & Innovation, Diamonds 101 and Inside the Diamond World. The council has also started a new, biannual trend report written by style experts, forecasting diamond jewelry trends, and incorporating styling tips.

In addition, the DPA’s Real is Rare, Real is a Diamond campaign will be replaced with the council’s new branding: “Only Natural Diamonds” (OND).

“Our new digital platforms will inspire and inform consumers globally about the values and heritage of natural diamonds, as well as promoting the significant innovation happening throughout the world of diamond jewelry,” added NDC’s managing director, Kristina Buckley Kayel. “The younger audience is clearly engaged and inspired when we present ourselves with authority in the digital world. It’s our aim to be number one across all digital platforms in our industry and our ambitious plans reflect these goals.”

The Natural Diamond Council will also aim to educate consumers on the sustainability and ethical practices of diamond producers, as well as everything they need to know when buying diamond jewelry.

In a release, the organization said the relaunch reflects the collective commitment of its members, Alrosa, De Beers, Dominion Diamonds, Lucara Diamond, Petra Diamonds, Murowa Diamonds, and Rio Tinto, to the growth of the industry beyond the current economic crisis.

“Our mission is to educate consumers on the industry and positive social contribution diamonds make to the world today,” said Stephen Lussier, Chairman of the NDC. “Our members are committed to these goals and the launch of the NDC marks an exciting step on this path.”

Visit www.naturaldiamonds.com for more information.

Source: DCLA

Tiffany Reports Recovery in China Sales

Tiffany & Co said its jewelry business is rebounding in China after the coronavirus pandemic and its merger with French luxury retailer LVMH is clearing regulatory hurdles.

The U.S. jewelry maker said Tuesday in an earnings release that its same-store sales were down about 44% in the fiscal first quarter as the pandemic shuttered shopping malls and stores across the globe. Yet CEO Alessandro Bogliolo pointed to China as “indicative that a robust recovery is underway.”

TIF swung to a net loss of $64.6 million, or 53 cents a share, from earnings of $125 million, or $1.03 a share, a year ago. Revenue fell 45% to $555.5 million.

Analysts were expecting Tiffany to earn three cents a share on sales of $701 million, but the coronavirus pandemic has made comparisons with estimates difficult to make.

The company has 324 stores worldwide. About 70% of the stores were closed as of April 30, when the fiscal first quarter ended.

Tiffany said its jewelry sales dropped off significantly in the three-month period. Engagement jewelry declined by nearly 50%, more than any other category.

The company said its focus on expanding business in China, investing in its websites and adding new jewelry products prior to the pandemic have made the company more resilient.

In China, same-store sales were down about 85% and 15% during the first and second months of the quarter, but have picked up again in April and May.

Shares galloped $2.53, or 2.1%, to $124.71 early Tuesday.

Source: DCLA