De Beers Debuts Online Rough Tenders

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.

Source: DCLA

French visitor finds 7.46-carat diamond

A visitor from France who was in the United States to see a rocket launch in Florida found a 7.46-carat diamond at Crater of Diamonds State Park on Jan. 11, according to a news release from the park.

Julien Navas, of Paris, who was making his first visit to Crater of Diamonds on Jan. 11, found the diamond on the surface of the park’s 37.5-acre search area. It is the largest diamond registered at the park since 2020 and the eighth-largest in the park’s history.

Navas was visiting the U.S. to see the United Launch Alliance’s Vulcan Centaur Rocket launch in Cape Canaveral, Fla., the release said. After the launch, Navas traveled with a friend to see the sights in New Orleans. Along the way, he learned about Crater of Diamonds State Park, which “piqued his interest as he had previously panned for gold and searched for Ammonite fossils. So he knew he had to visit the park while he was in the U.S.”

A few days before his visit, the park had received over an inch of rain, making it a wet and muddy day. After purchasing his ticket and renting a basic diamond hunting kit from the park, “Navas headed into the search area and got to work.”

“I got to the park around nine o’clock and started to dig,” Navas said in the release. “That is backbreaking work so by the afternoon I was mainly looking on top of the ground for anything that stood out.”

According to Assistant Park Superintendent Waymon Cox, many of the park’s largest diamonds are found on the surface. “We periodically plow the search area to loosen the diamond-bearing soil and promote natural erosion,” he said in the release. “As rain falls on the field, it washes away the dirt and uncovers heavy rocks, minerals, and diamonds near the surface.”

After searching for several hours, Navas carried his finds to the park’s Diamond Discovery Center, where he learned that he had discovered a brown diamond weighing 7.46 carats. When he learned that he had found a diamond, the release said, Navas was stunned and said, “I am so happy! All I can think about is telling my fiancée what I found.”

The diamond has a deep chocolate brown color and is rounded like a marble. It is about the size of a candy gumdrop.

“It is always so exciting to see first-time visitors find diamonds, especially large diamonds like this one,” Park Interpreter Sarah Reap said in the release.

Navas called Crater of Diamonds State Park “a magical place, where the dream of finding a diamond can come true! It was a real great adventure.”

Navas said he plans to return to the park with his daughter when she is older.

“Many visitors choose to name the diamonds they find at Crater of Diamonds State Park. Navas decided to name his find the Carine Diamond, after his fiancee. He said he hopes to have the stone cut into two diamonds, one for his fiancee and one for his daughter,” the release said.

The Carine Diamond is the largest diamond registered at the park since 2020, when Kevin Kinard found the 9.07-carat Kinard Friendship Diamond over Labor Day weekend. It is the eighth-largest diamond registered since the Crater of Diamonds became a state park in 1972, according to the release.

Eleven diamonds have been registered at Crater of Diamonds State Park in 2024 so far. An average of one to two diamonds are found by park visitors each day.

“In total, over 75,000 diamonds have been unearthed at Crater of Diamonds State Park since the first diamonds were discovered by John Huddleston, a farmer who owned the land long before it became an Arkansas State Park in 1972. The largest diamond ever discovered in the United States was unearthed in 1924 during an early mining operation on the land that later became the state park,” the release said.

   Julien Navas, of Paris, France, found a 7.46-carat diamond on the surface of Crater of Diamonds State Park in Murfreesboro on his first visit to the park’s 37.5-acre search area. (Photo courtesy of Arkansas State Parks)

Source: DCLA

Michael Hill closes six stores, axes senior managers amid tough retail environment

Well-known jewellery chain Michael Hill has revealed it closed six stores in the past six months and scrapped senior management roles due to tough retail conditions.

In a trading update released by the stock market listed company, it described the six months to December 31, 2023 as a “challenging period for the business” as its profitability took a hit and is estimated to be down 45 to 39 per cent on the same period of 2022.

Of the six “underperforming” stores it closed, one was in regional WA, one in Queensland, one in Victoria, two in NSW and one in Canada.

In the statement, the company blamed economic conditions for “impacting consumer sentiment”, adding that its profit margin was affected by the inflated cost of gold and diamonds, and “aggressive competitor behaviour”, which led to a decision to “reduce operating costs, including the exit of a number of senior management roles”.

It did not reveal how many staff or which roles were affected.

Michael Hill also owns the more affordable Bevilles chain.

The company achieved sales of $362.8 million during the six months to December 31, 2023, which was up 4.1 per cent on the same period of 2022.

But it revealed its gross profit for the period was expected to be between $30-33 million, which represents a fall of 45 to 39 per cent from the gross profit of $54.5 million it posted in the second half of 2022.

Earlier in 2023 the company bought the more affordable Bevilles jewellery chain, and it opened four new Bevilles stores in Australia during the past six months.

Michael Hill CEO and managing director Daniel Bracken said profit margins were hit in the second half of 2023. Picture: Richard Walker.

Source: news.com.au

Rising Gold Prices and Tourism Drive Luk Fook Jewelry Sales

Retail sales at Hong Kong based jeweler Luk Fook soared in the third fiscal quarter as tourism recovered and the price of gold surged.

Sales grew 46% year on year for the three months that ended December 31, 2023, the company said last week. The rise comes on the back of a mounting revival in visitor traffic to the municipality since early last year, when the border reopened as the latest Covid-19 restrictions eased. Sales were up 40% compared to the same period of 2019, prior to the start of the pandemic.

“Following the complete reopening of borders among Hong Kong, Macau and the mainland, the Hong Kong and Macau market has shown a sustained recovery,” the company reported. “Despite an annual rise of over 14% in the average international gold price overall same store sales for gold products still displayed significant growth of 80%.”

In Hong Kong and Macau specifically, retail sales spiked 97%, with same-store sales those at branches open for at least a year gaining 80%. On the mainland, those figures increased 37% and 18% respectively.

Same store sales of gold products jumped 94% in Hong Kong and Macau, as the rising price of gold led to higher value transactions. In that category, fixed price gold jewelry as opposed to gold sold by weight rose 88%, while diamond-set jewelry went up 25%.

In China, same store sales of gold products advanced 22%. Fixed priced gold jewelry was up 23%, somewhat offsetting a 35% drop in diamond-set jewelry.

Source: DCLA

De Beers Slashed Rough Prices. Will Polished Suffer?

On Monday, De Beers’ customers turned up at the first day of the miner’s January sight to find rough prices were down by an average of 10% to 15%. The reductions were more drastic than many had predicted.

The drops ranged from slight adjustments for the more in-demand smalls, all the way to an estimated 20% to 25% cut for 2- to 4-carat, lower-clarity rough, sources said.

Sightholders usually celebrate a price decrease, since their margins can be thin at the best of times. But, immediately, the industry started asking the obvious question: Will this cause polished prices to fall?

The basic assumption is that cheaper raw materials mean cheaper end products. Yet the situation with diamonds is more complicated.

First, there are different ways of pricing polished. You can sell based on the current cost of replacing the goods — a method that would imply polished prices should fall, since De Beers rough is now cheaper. However, it’s also possible to price according to the input cost, with the vendor aiming for a certain profit based on how much the rough actually cost. This would, in theory, mean the latest drop in rough prices would not impact polished until around March, when the new, cheaper material enters the market as polished.

Still, most sightholders that spoke to Rapaport News this week don’t expect polished prices to suffer — though the people who buy their polished might disagree. The miner’s move, sightholders argue, was merely an adjustment to polished-price levels and to the price of rough at open tenders and auctions.

De Beers had priced its goods some 15% higher than the rest of the rough market, as it chose to sell less volume since August rather than discounting during the market slump. Its last significant price decrease before this was in July 2023. Since the start of that month, the RapNet Diamond Index (RAPI™) for 1-carat diamonds has fallen 12.5%.

Price drops at De Beers are not always in sync with the market. In recent years, the company has held off reducing prices until crises have eased, as it did in 2020 following the first round of Covid-19 lockdowns. De Beers sold just $216 million in rough at its last two trading sessions of 2023 as it followed this policy amid weak demand.

But the company needs revenue after incurring a loss in the second half of last year. It appears to have chosen the market improvement as an opportune time to stimulate sales.

“In the final quarter of 2023, we saw some stabilization in polished prices, including a number of areas of natural polished now starting to see some price increases,” a De Beers spokesperson said in a statement Wednesday. “Following this stabilization, we have realigned our rough-diamond trading activities, in terms of prices, volumes and supply flexibility, to reflect prevailing industry conditions.”

With the market in flux, De Beers also showed sightholders sample assortments of rough diamonds that indicated the types of goods and prices customers can expect for this year. Based on these so-called “to see” boxes, sightholders were able to apply for additional goods if their need for rough has increased since they submitted their supply applications in mid-December, the spokesperson explained.

However, market participants expect total sales at the sight of $300 million to $400 million — low for January, which is usually a time of post-holiday restocking. The recent season in the US was okay, but Chinese demand remains slow.

Whether sightholders maintain this cautious approach — and De Beers doesn’t sell too much — will be crucial. Excessive buying could lead to a repeat of last year’s oversupply, which ended with India’s two-month voluntary freeze on rough imports. During the recent crisis, De Beers continued selling — albeit at lower volumes — even when competitor Alrosa canceled sales.

At the January sight, De Beers also removed the extra concessions that had allowed sightholders to refuse goods in the final sights of last year without being penalized. The end of this flexibility increases the danger that goods will flood the market and that manufacturers will sell polished cheap to increase cash flow and raise money for rough.

The fact that De Beers diamonds remain relatively expensive could itself support polished prices, since sightholders have no room to offer further discounts.

“There’s no hooray if you look at those prices,” said one sightholder, noting that even the new rates will probably enable businesses to break even rather than turn a significant profit. “It’s just aligning with [reality]. It’s not like you’re going to make 10% [profit].”

Another sightholder agreed the reductions didn’t go far enough — but believed it would likely be up to the trade to drum up polished demand rather than expect further cuts to rough prices.

“If anybody thinks this is a price reduction — no, it’s a halfway correction, and not even achieving the final goal,” he asserted. “But I also believe they won’t do much [in terms of price cuts] after this. I think their expectation is: ‘Listen, we got you 60% of the way. The other 40%, you guys have to jump up now.’”

Source: DCLA

Petra Sales Fall Amid Slow Market Recovery

Revenue at Petra Diamonds declined in the first fiscal half as slow demand and India’s two month buying halt affected the miner’s rough sales.

Sales slipped 9% year on year to $187.8 million in the six months that ended December 31, the company said Tuesday. The drop came despite a 27% increase in sales volume to 1.7 million carats, as like for like prices during the period dropped 13% and the miner offered a weaker product mix, it explained.

Group production grew 2% to 1.4 million carats for the first half, partly reflecting the ramp up to full output at the Williamson deposit in Tanzania. Exceptional rough stones those fetching $5 million or more didn’t contribute any revenue during the period, the miner noted.

Petra is on track to meet its production guidance of between 2.9 million and 3.2 million carats for the full fiscal year ending June 30, it said. However, the miner expects output to come in at the lower end of that range.

The company’s net debt rose to $212.3 million as at December 31, compared to $176.8 million on June 30, it noted. The increase is due to the timing of tenders, the continued lower prices for rough, and the need for capital to resume operations at Williamson and extend the life of the Finsch and Cullinan mines in South Africa, Petra added.

Source: DCLA

Rio Tinto Output Dwindles as Mine Depletes

Rio Tinto’s diamond production fell in 2023 following the closure of portions of its Diavik mine in Canada earlier in the year.

Total production dropped 28% to 3.3 million carats for the full year, the company said Tuesday. Rio Tinto completed mining at Diavik’s A418 underground area and at its A21 open-pit kimberlite pipes, it explained. Improvements in the volume of ore produced at the A154N underground partially offset the loss in output from those portions.

In the fourth quarter, output slipped 50% year on year to 659,000 carats, and was down 13% from the previous quarter.

Diavik is Rio Tinto’s sole diamond mine following the closure of Australia’s Argyle deposit in November 2020. The miner’s share of Diavik increased from 60% to 100% in November 2021, when it assumed control of the asset following the inability of its joint-venture partner, Dominion Diamond Mines, to pay its share of upkeep. In November, Rio Tinto also sold its 75% share of the Fort à la Corne diamond exploration project in Saskatchewan to joint-venture partner Star Diamond Corporation, in an effort to focus on metals and minerals.

Rio Tinto will spend $40 million to move into underground mining at the A21 portion of Diavik, which it believes could add more than 2 million carats of rough production, it reported in February 2023. That expansion is due to keep the mine in operation until the first quarter of 2026.

Meanwhile, the company did not provide rough-production guidance for 2024.

Source: DCLA