De Beers latest sale shows diamond demand remains strong

 

                  De Beers rough diamonds

De Beers, the world’s top diamond producer by value, saw sales jump by 18% in the second cycle of 2022 compared to the same period last year, attesting to the industry’s consolidated recovery from the first pandemic-induced shutdowns.

The Anglo American unit sold $650 million of diamonds between February 21 to February 25, down $10 million from the first cycle of the year, but higher than the $550 million it sold in the second cycle of 2021.

De Beers sells its gems through 10 sales each year in Botswana’s capital, Gaborone, and the handpicked buyers known as sightholders generally must accept the price and the quantities offered.

Customers are given a black and yellow box containing plastic bags filled with stones, with the number of boxes and quality of diamonds depending on what the buyer and De Beers agreed to in an annual allocation.

The company said that owing to the restrictions on the movement of people and products in various jurisdictions around the globe, it has continued to implement a “more flexible approach” to selling roughs, which included extending the latest sight event beyond its normal week-long duration.

The miner, which has benefitted from a steady recovery in the diamond market, is said to have hiked prices by about 8% in January. It had already 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. Most of these hikes, however, were applied to stones bigger than 1 carat.

The strategy granted De Beers a steady recovery during 2021. Its diamond prices rose by 23% in “just over a year,” said Mark Cutifani, CEO of Anglo American in a December presentation.

Russia-Ukraine effect
De Beers may benefit from the sanctions imposed to Russian companies as Moscow-based Alrosa (MCX: ALRS), the world’s top diamond miner by output, is its main competitor.

Alrosa and its chief executive Sergei S. Ivanov were included in the first wave of restrictions announced by the US Department of the Treasury’s Office of Foreign Assets Control (OFAC), which targeted mainly banks and energy firms.

Data from the US Treasury shows Alrosa is responsible for 90% of Russia’s diamond production and 28% of global supply.

De Beers chief executive Bruce Cleaver said the company has been “shocked” and “saddened” by the war in Ukraine, so it will donate $1 million to aid organizations operating in the region and providing support to those affected by the ongoing conflict.

Experts believe that The Kremlin will soon be unable to pay its debts amid increasing international sanctions against Russia.

Credit ratings agency Fitch Ratings has downgraded its view of the country’s government debt, warning a default is “imminent” for the second time this month.

“The further ratcheting up of sanctions, and proposals that could limit trade in energy, increase the probability of a policy response by Russia that includes at least selective non-payment of its sovereign debt obligations,” the agency said.

Moscow has told investors that it will continue to service its sovereign debt but warned that international sanctions imposed on its energy industry could limit its ability and willingness to meet its obligations.

Source: DCLA

Alrosa Profit Soars as Focus Turns to Sanctions

                        

Alrosa has highlighted concerns about the impact of the US’s punitive measures after reporting its strongest annual earnings in five years.

Revenue jumped 51% to RUB 326.97 billion ($2.99 billion) in 2021 as the diamond market recovered from the previous year’s downturn, the Russian miner reported Wednesday. This drove net profit to RUB 91.32 billion ($834 million), almost triple 2020’s figure of RUB 32.25 billion ($297.3 million).

However, the fallout from Russia’s invasion of Ukraine has become the most pressing issue for the company, with the US imposing sanctions on Alrosa and its CEO, Sergey Ivanov. This blocks American firms from extending credit to the miner. An alliance of Western governments has also excluded several Russian banks from the Swift international payment system.

“These sanctions are preventing the group from obtaining financing from persons and entities connected to US and from effecting payments through sanctioned banks,” Alrosa said in its results statement.

Management said it was continuing to run the business as usual and “service its obligations,” but noted that the impact of the actions was unpredictable.

In the fourth quarter of last year, revenue fell 28% year on year to RUB 70.73 billion ($642.7 million), reflecting an unfavorable comparison with the sharp market rebound a year earlier as well as scarcities of goods for the company to sell. Profit slid 43% to RUB 12.14 billion ($111.1 million).

With rough in short supply globally, Alrosa made a slight increase to its 2022 production plan, forecasting output of 34.3 million carats, compared with earlier guidance of 33 million to 34 million carats.

Source: DCLA

US Places Sanctions on Russian Miner Alrosa

                       

The US has imposed sanctions on Alrosa and its CEO, Sergey S. Ivanov, in response to Russia’s invasion of Ukraine.

The diamond miner is one of 11 entities the Department of the Treasury has identified as being owned by or connected to the Russian government, according to a Thursday statement. The measures restrict American companies’ ability to engage in debt and equity transactions with Alrosa after Russia launched military action in Ukraine last week.

“Effectively, this action bans US businesses and persons from entering into debt transactions longer than 14 days with Alrosa but does not impose the harsher sanctions of an asset freeze and outright prohibition of all business,” the Jewelers Vigilance Committee (JVC), a source of legal guidance for the industry, said in an alert to members. “For the jewelry industry, any open memo agreements previously entered into with terms longer than 14 days should immediately be amended to shorten the terms, and/or closed.”

US companies should also evaluate any current transactions with Alrosa or its stateside affiliate, Alrosa USA, to ensure they do not violate the sanctions, the JVC added. The executive order does not apply to goods acquired from Alrosa or Alrosa USA before February 24, the organization pointed out.

Alrosa, a third of which is owned by the Russian state, is responsible for 90% of Russia’s diamond-mining capacity, the Treasury noted. The sanctions include Ivanov because the US counts him among the “leaders, officials, senior executive officers, or members of the board of directors” of the Russian government, and because he is the son of sanctioned official Sergei B. Ivanov, a close ally of Russian President Vladimir Putin, the statement continued.

“Treasury is taking serious and unprecedented action to deliver swift and severe consequences to the Kremlin and significantly impair their ability to use the Russian economy and financial system to further their malign activity,” said US Treasury Secretary Janet Yellen. “Our actions, taken in coordination with partners and allies, will degrade Russia’s ability to project power and threaten the peace and stability of Europe.”

Alrosa said its interactions with international partners would continue and that it was working to avoid any impact.

“Alrosa is carefully studying new working conditions in connection with the imposed sanctions,” a spokesperson for the miner told Rapaport News Sunday. “We intend to offer all our stakeholders the best possible service. We do our best to fulfil our obligations so that their businesses would continue to operate as usual.”

Source: DCLA

De Beers Raises Prices of Smaller Diamonds

    Sorting a parcel of rough diamonds Gaborone,              Botswana.

De Beers lifted prices of smaller rough at this week’s sight, its second consecutive increase, as the industry continued to express concerns about a perceived mismatch with polished.

Goods weighing less than 0.75 carats saw price hikes of around 5% at the February sale, while larger items were mostly stable, sightholders and industry insiders told Rapaport News this week.

The latest adjustments follow a strong US holiday season for retail and come amid robust demand in the polished sector while the industry restocks. Rough prices have rocketed in recent months, reflecting this appetite as well as supply shortages.

Prices at auctions and tenders have risen even more strongly than sight goods, with traders enjoying unprecedented premiums when reselling De Beers boxes on the secondary market.

However, manufacturers’ margins have suffered. This was a major point of discussion at the Dubai Diamond Conference, which took place Monday.

“There is still some buzz, but people are very cautious now because they’ve understood that prices have hit the ceiling and [De Beers] is facing resistance now with the new prices,” a sightholder said Tuesday on condition of anonymity. “There will be some stability and there has to be some mindfulness, because rough prices are outpacing polished prices so anyone who buys rough at those prices is not going to make a profit.”

The increases at the February sight followed sharper hikes in January, when rates jumped by up to 15% in the smallest categories and by 5% to 12% in larger sizes.

“What we try and do very hard at De Beers is price properly in accordance with demand,” De Beers CEO Bruce Cleaver told Rapaport News on the sidelines of the Dubai event. This is based on expectations of how the final polished will sell when it becomes available two or three months later, he explained. “Our crystal ball is no better than anyone else’s, but it’s based on a lot of data at the time that we make these pricing decisions.”

China Sales ‘Average’

Meanwhile, sales in the Far East during the recent Chinese New Year were steady, producing figures broadly in line with last year, dealers reported. This came despite headwinds in the latter months of 2021, including fresh Covid-19 outbreaks, a real-estate crisis, and power shortages.

The unfavorable comparison with last year’s season of post-lockdown recovery also affected the numbers, while fewer consumers took trips within China — usually a driver of seasonal demand, Cleaver pointed out.

“There’s no question that people are not traveling as much between the big Chinese cities and coming into the big Chinese cities to buy as they might have been because of [Covid-19],” he noted, cautioning that the information was preliminary. “In a sense, it could have been a bit better, but the early data I’ve seen is that it’s been an average to reasonable New Year.”

However, store openings in the mainland’s tier 3 and 4 cities are progressing well, he said.

“I don’t think there’s any reason to think that will slow down, and our clients tell us that’s continuing to happen,” the executive added.

The February sight, the second sale of the year, began on Monday and ends Friday.

Source: DCLA

Surging Diamond Demand Helps Botswana Trader Post Record Sales

                       Botswana Diamond Mine

Botswana’s state-run diamond trader reported record revenue last year with sales surging almost five fold after U.S. imports recovered from a Covid-19 induced slowdown.

Okavango Diamond Company sold $963 million of rough diamonds last year, said Dennis Tlaang, a company spokesman. The revenue was the most since the company began operations in 2012, he said.

“The demand for natural rough diamonds remained strong throughout 2021 driven primarily by positive market sentiment in key markets such as the United States,” Tlaang said.

Sales may rise further this year after De Beers, the world’s biggest producer of the stones, pushed through one of its most aggressive diamond price increases in recent years. Okavango also got higher than normal prices in the sole auction it held this year, Tlaang said.

De Beers Implements Big Diamond Price Hike as Demand Runs Hot. A Buying Frenzy in Cheap and Tiny Diamonds Sends Prices Soaring. Diamond Sold for $12 Million in Cryptocurrency at Sotheby’s. “We believe this is a good indicator of the market dynamics of 2022, at least for the first half of the year,” he said. “The company will continue to drive customer participation by marketing its rough diamond assortment in key markets such as Antwerp and Dubai.”

Under a 2011 agreement between De Beers and the government of Botswana, Okavango purchases 25% of the nation’s annual production for independent marketing, while the balance is sold through the De Beers’ trading network.

Source: DCLA

De Beers Cullinan Blue Diamond Could Bring $48M at Auction

De Beers Cullinan Blue Diamond

Sotheby’s will auction a stone described as “the largest vivid blue diamond ever to appear at auction” on April 27 in Hong Kong.

Sotheby’s estimates that it could bring $48 million.

Cullinan Blue Diamond

The 15.1 carat step-cut blue was cut from a rough stone discovered in April 2021. It is “the largest internally flawless step cut vivid blue diamond that the Gemological Institute of America (GIA) has ever graded,” according to a press statement.

“This diamond ranks as one of the best De Beers has ever seen,” said Bruce Cleaver, CEO of De Beers Group. “It is extremely rare and unique, and as the Home of Diamonds, De Beers is pleased to join together with Sotheby’s to bring this diamond to the world.”

Only five blue diamonds over 10 carats have ever come to auction, Sotheby’s notes. Until now, none has exceeded 15 carats.

“Blue diamonds of any kind are rare on the market, but this is the rarest of the rare; nothing of remotely similar calibre has appeared at auction in recent years,” says Patti Wong, chairwoman of Sotheby’s Asia. “Hundreds of millions of years in the making, this extraordinary blue diamond is surely one of nature’s finest creations.

The diamond comes from the Cullinan mine in South Africa.

Source: DCLA

AcuVal Jewellery valuation certificates

                    

Digital Jewellery #Valuation #Certificate in your personal Vault.

Or printed the hard copy for your files.

The best of both worlds at a fraction of the cost and updated every year for your #insurance requirements.

AcuVal is the safe and secure repository for your valuation certificates.

Keep records of your precious items up top date Always ready to send to your insurer or #jewellers.

Maintain a list of #jewellery items and track the value.

Your digital valuation certificate vault stores an accurate record of the value your valuables.

All on your Free AcuVal App on the App store or Download link here https://acuval.com.au/download/#download