Lucapa reported a slight increase in total rough sales for FY2023 in what it described as a solid performance.
The Australian miner announced revenues of $102.2m, up by 1 per cent on the previous year.
Q4 earnings from its two mines – Lulo in Angola and Mothae in Lesotho – slipped by 1 per cent to $40.8m.
During the year Lucapa sold 11 diamonds from Lulo that fetched a total of $32.7m at two Q4 tenders in Q4. It also recovered two Type IIa diamonds from Lulo, a 208-ct and a 235-ct, the second largest recovery since commercial operations started in 2015.
“Both mines delivered a solid performance against processing and production targets in Q4 and we are pleased with the full year results which saw group guidance achieved,” said managing director Nick Selby.
Mothae performed well despite experiencing a lower dollar per carat average in Q4, which impacted its overall diamond price for the year. Lulo had a good run which saw its high-value recoveries attract firm prices at tender.”
Lulo recovered fewer carats than forecast (30,585) but achieved an average $2,700 per carat, well up on the forecast of $2,300. Mothae recovered more carats that forecast but saw average price per carat down from guidance of $1,000 to an actual $775.
Lucapa said in its ASX announcement that the overall diamond price index began to trend upwards towards the end of 2023, because of India’s two-month moratorium and EU sanctions on Russian goods. “Tightening economic conditions imposed by central banks and a surge in inflation continues to impact discretionary spending on items such as diamond jewellery,” it said.
“However according to media reports at the end of 2023, there are signs the US market is recovering, however the Chinese market remains slow.”
Lucapa holds a 40 per cent stake in Lulo. The remainder is owned by Angola’s national diamond company Endiama (32 per cent) and by private Angolan company Rosas & Petalas (28 per cent). Lucapa holds a 70 per cent stake in Mothae. The government of Lesotho holds the remaining 30 per cent.
A 21.38 carat Fancy Vivid Yellow diamond is to be auctioned tomorrow (31 January) at Sotheby’s Hong Kong with an estimate of HKD 8,000,000 to 11,000,000 HKD ($1m to $1.4m).
The radiant-cut VS1 gem is flanked by two tapered baguette diamonds, mounted in platinum and 18 karat yellow gold, inscribed HW (Harry Winston).
The FCRF (Fancy Color Research Foundation) gives the stone a visual score of 7 out of 12. It says the stone looks slightly larger in relation to its weight, which is an important feature to consider when buying color diamonds.
“A large vivid yellow radiant cut diamond features a low inner grade and prominent colorless patches around the crown area,” it reports. “No significant green or brown undertone is visible in the hue.”
The stone leads the live Important Jewels auction, Sotheby’s first jewelry auction of the year in Hong Kong, comprising a selection of diamonds, colored stones, jadeites and signed jewels.
The diamond industry is bracing for significant change in 2024.
New sanctions on Russia will fast-track the adoption of traceability programs across the supply chain. Should they wish to sell those diamonds into the Group of Seven (G7) countries, companies will have to prove their goods were sourced from non-Russian production.
On December 6, the G7 — comprising Canada, France, Germany, Italy, Japan, the United Kingdom, and the United States — announced its latest sanctions, aimed at “limiting Russia’s ability to fund its illegal war,” the joint statement read.
Diamonds featured prominently in this round of measures, perhaps because the group had delayed a policy decision on how to handle Russia’s diamond supply until then — nearly two years after the war in Ukraine began on February 24, 2022.
Initial sanctions targeted Russia’s oil and gas industry as well as restricting its banking system and the transfer of funds, while touching on diamonds in an ambiguous way.
Still, diamonds contribute to Russia’s government revenue and therefore to the war effort, causing the sector to be entangled in the sanctions discussion.
The Russian Federation owns a 33% stake in mining company Alrosa, the world’s largest producer of rough diamonds by volume. The company generated rough sales of $4 billion from 45.5 million carats in 2021, the last prewar publication of its earnings.
“The goal of this effort remains centered on reducing revenue that Russia earns from diamonds, which fuels Moscow’s war machine against Ukraine,” the European Commission (EC) stressed in a separate statement, which provided additional details about the sanctions.
Sanctions in place The sanctions will replace existing measures some countries implemented earlier.
The US banned imports of diamonds from Russia in March 2022, but left a loophole allowing for polished stones transformed from Russian rough in third countries. The European Union delayed implementing any restrictions out of concern such measures would place Belgium at a disadvantage in its competition with Dubai — as well as Mumbai and Tel Aviv — for market share as the premier rough-trading center. The United Arab Emirates (UAE), India and Israel have not implemented any restrictions on Russian-origin diamonds, though they export goods to those countries with a ban in place.
An EU-only import ban would not have been efficient, the EC added in its explainer. “It would have meant the death of Antwerp,” said an official who requested anonymity. “What is on the table is the survival of Antwerp.”
Consequently, the EU has been the driving force for a fully coordinated approach and timeline within the G7, the European Commission emphasized.
That effort sees the group phase in various levels of diamond sanctions.
The first stage, which took effect on January 1, banned direct imports of diamonds from Russia. On March 1, the sanctions will be extended to diamonds above 1 carat that were sourced from Russian rough but polished in a third country, addressing the loophole that existed in the original US sanctions. Finally, beginning September 1, the restrictions will include lab-grown diamonds, jewelry, and watches containing diamonds above 0.50 carats.
Traceability component The big challenge lies in how to verify that a diamond is not of Russian origin. To that end, the group will establish a “robust traceability-based verification and certification mechanism for rough diamonds,” which will be mandatory from September 1, the EC said in its statement. A pilot program for the system will begin on March 1, it added.
The idea is to create a digital twin of the real diamond in its rough state and to issue a certificate of the diamond’s origin, the commission explained. It is unclear whether that certificate will be a physical printout — as customs officials are used to — or only digital, noted another European official.
The identifying information and certificate will be entered into a stand-alone blockchain-based ledger, which will be inter-operational with several existing solutions facilitating the traceability mechanism, an EC spokesperson explained in an email.
In other words, there will be a centralized blockchain that will be fed with information from traceability service providers.
“This allows the diamond to be traced through the production process and can be presented at the time of importation of the finished diamond,” the spokesperson said.
The commission did not clarify by press time the criteria service providers will have to meet to contribute to the G7 system, or what information will be uploaded to the centralized ledger. Companies with diamond-related traceability programs include De Beers’ Tracr, Everledger, iTraceiT, the Gemological Institute of America (GIA), and Sarine Technologies.
Industry concerns The certification of goods registered on the ledger will be done in Belgium, with some exceptions being considered, an official noted.
As the only producer country among the G7 nations, Canada may be given the option to certify its own production, the official said. It is also understood that rough earmarked for beneficiation — polishing in the country of mined origin — will be exempt from passing through Belgium to be G7-certified.
De Beers is waiting for clarification on several points, most importantly whether its practice of mixing supply from its mines in Botswana, Canada, Namibia, and South Africa — known as aggregation — will be affected.
“We await clarity on how the new import requirements will be implemented in practice and will urge a sensible and practical approach to implementation that recognizes the fundamental importance of aggregation in delivering value for diamond businesses and producer countries, as well as the significance of beneficiation,” a company spokesperson said.
De Beers’ assortments will still have to be certified in Belgium, but it will be an exception in that these goods will be the only “mixed origin” ones that will be allowed, the official noted.
Yoram Dvash, president of the World Federation of Diamond Bourses (WFDB), urged the G7 to include other centers in the registration process.
It is possible to create “a more efficient and effective mechanism” by allowing other major rough diamond centers such as Dubai, Mumbai, and Tel Aviv, as well as producing countries, to conduct the inspection and registration of goods, Dvash stressed in a statement immediately following the G7 announcement.
The Industry’s Russia Crisis: Formulating Sanctions
Ready for volume Among the concerns expressed have been whether Antwerp can handle the large volumes that are expected to accompany the new mechanism. One representative estimated the system would not result in higher volumes than those with which the Antwerp Diamond Office has dealt in the past. That official referenced 2021 as a comparative base, when Belgium imported 68.1 million carats of rough valued at EUR 6.49 billion ($7.1 billion), and exports reached 90.7 million carats worth EUR 7.48 billion ($8.18 billion), according to data the National Bank of Belgium published.
Before the war in Ukraine, Belgium was the largest buyer of Russian rough, importing 27.1 million carats worth EUR 1.57 billion ($1.72 billion) in 2021 — 24% of its total rough imports by value and 40% by volume (see graph). Excluding the Russian goods will mean Antwerp won’t see a significant spike compared to 2021, the official noted. Belgium’s imports of rough from Russia declined 19% in 2022 and have slumped 76% year on year to just EUR 285.1 million ($311.7 million) in the first nine months of 2023, the National Bank of Belgium data showed.
The bigger question is whether the traceability programs can handle such volumes. To date, adoption within the trade has been minimal and largely driven by retail jewelry brands that require thorough source verification.
“We continue to accelerate development of Tracr and engage with the wider industry as we await further details so that Tracr can support the industry’s needs as best as possible,” a De Beers spokesperson said. “However, we also acknowledge that even Tracr, the world’s most advanced diamond traceability platform, does not yet have the breadth of coverage that would be required to meet the G7 objectives in the stated time frames.”
Sarine recently unveiled its Autoscan Plus system, which it claims can scan 1,000 stones per hour for its Diamond Journey traceability program. Autoscan Plus was built for scale and developed as a smaller, cheaper solution, Sarine CEO David Block said.
Extra cost The Antwerp World Diamond Centre (AWDC), the local trade body that incorporates both government and industry elements and oversees operations of the Diamond Office, is reportedly expanding its capabilities to handle the extra volume.
Still, many in the trade are skeptical whether the industry is ready to implement a digital traceability solution at such a scale. “The government fell for false promises regarding how to work and implement the system,” said one dealer. “Even if it is possible, it will be expensive.”
Early critics of the system have expressed concern about the additional cost of certification and of potential double shipping to Belgium.
“Having only one point for registration and inspection will impose additional costs of time and money to the diamond trade,” the WFDB said. It will lengthen the cycle of trading and getting goods to market, added another dealer.
Vipul Shah, chairman of India’s Gem & Jewellery Export Promotion Council (GJEPC), expects the move will impact the cost of raw materials for local manufacturers. “We are coordinating with the World Diamond Council [WDC] to mitigate such disruption and cost impact,” he said in an email.
Members of the trade cautioned that the cost of certification may even make Russian goods more attractive, while the market bifurcates to a two-tier system.
De Beers said it wants to understand how risks such as the creation of a potential supply bottle neck and additional costs will be managed if the G7 intends to limit the points of admission of rough diamonds into G7 nations. “We advocate for a solution that facilitates the trade of our diamonds into G7 countries, rather than restricting them,” the De Beers spokesperson stressed.
The EC responded that the cost for certification is expected to be negligible, “especially considering the price of diamonds,” according to its spokesperson. “The fee will be cost-bearing, not designed to generate profits.”
As for the double shipping, officials expect the goods will simply pass through Belgium as the main gateway — instead of other centers — before being sent for manufacturing. The extra shipping cost will likely apply for rough designated for tender sale in other rough-diamond locations such as Dubai and Tel Aviv.
Demand for Diamond Traceability Spikes
Artisanal and cottage industry
While the registration of rough will be overseen by the AWDC at the Diamond Office, it is a government-led mechanism, Rapaport understands. That means that it would be required at the point of export, which is significant when dealing with the artisanal mining sector.
So, if the artisanal miner sells his goods to a buyer in the location of mining, it will be up to the buyer to send the goods to Belgium for registration, an official explained.
Trade bodies, along with De Beers, echoed the WDC’s mantra that “no one should be left behind,” expressing concern that artisanal miners will be at a disadvantage under the new system.
“If such a solution is intended to be fully technological, this would be to the detriment of African producers, artisanal miners and the wider industry, with significant risk of unintended consequences,” the De Beers spokesperson added.
Artisanal and small-scale miners, who typically don’t have access to technology, should be able to send their rough into any cutting center to be registered and certified, trade members wrote in a draft letter being prepared for presentation to the G7, which Rapaport saw.
Similarly, the Indian industry is urging the G7 to take into consideration the interests of small and medium enterprises for whom the adoption of technology to track their polished diamonds might be out of reach at this stage. These marginal diamond units support millions of livelihoods, the GJEPC’s Shah stressed.
EU officials expect the program may even help formalize the artisanal mining sector and motivate investment in that segment — such as among G7 government bodies with an interest to make the traceability mechanism work.
Time to engage
But the system will require extensive engagement with the trade in the next few months to make it work. The industry has many questions and concerns, as communications from the WFDB, GJEPC, De Beers and others revealed. Some queries, such as what to do with existing inventory in the market, require urgent attention.
“I call upon the G7 countries to engage with the industry organizations in order to reach a more equitable and balanced mechanism,” Dvash stressed.
The G7 pledged to continue consultations among its members and with other partners, including producing countries as well as manufacturing countries, “for comprehensive controls for diamonds produced and processed in third countries on measures for traceability.”
It would be surprising if such discussions led to a complete overhaul of the planned system, as the industry might desire. As one trader admitted, the G7 is intent on its implementation, while the US and the EU will use the banks to enforce the sanctions — blocking payments within the pipeline in cases of noncompliance.
The governments charged with developing and implementing the system appear confident they’ve reached the optimal solution.
“This strengthened approach will provide certainty to our citizens and consumers that they are not purchasing Russian diamonds,” the EC spokesperson stressed. “It will also deliver stronger transparency to producers, including in countries with artisanal production. This will positively impact both earnings from diamonds and producers’ story and brand throughout the supply chain.”
It will take a lot of convincing for the trade to adopt such sentiment fully before the traceability pilot program goes into effect on March 1. It seems, at this stage, they’ll have little choice.
Revenue from the Ekati deposit’s rough production soared during the fourth quarter as demand for its goods strengthened, according to owner Burgundy Diamond Mines.
Sales from the Canadian mine rose 37% year on year to $166 million for the three months that ended December 31, Burgundy reported last week. Sales volume jumped 41% to 1.8 million carats, from 1.3 million carats a year before, outweighing a 2% drop in the average price to $93 per carat.
Output increased 19% to 1.2 million carats for the October-to-December period. During the quarter, Burgundy held four auctions, including one for special stones. The miner sold all of its available inventory during those auctions, it noted.
“Each of our four auctions during the December quarter were oversubscribed due to significant customer demand,” said Burgundy CEO Kim Truter. “This has put us in a strong position with a healthy cash balance to fund the upcoming winter-road resupply and to commence the important work activities to extend the mine life at Ekati.”
Burgundy is currently retrieving ore from two sites at Ekati: an open-pit operation at Sable and an underground one at Misery. It is also working on extending Sable underground and is optimizing the Point Lake area.
Burgundy purchased Ekati from Arctic Canadian Diamond Company for $136 million in March.
One of the most famous red diamonds from Brazil is “The Moussaieff Red” which was discovered by a Brazilian miner named Ze Tatu in the state of Minas Gerais.
It is a 5.11 carat, Internally Flawless, Fancy Red diamond which weighed 13.90 carats in the rough — a true treasure from the Brazilian diamond legacy.
A number of remote employees at Rio Tinto’s Diavik diamond mine in Canada died Tuesday after the small plane carrying them to the site crashed.
“We have been informed by authorities that a plane on its way to our Diavik mine, carrying a number of our people, crashed…resulting in fatalities,” said Rio Tinto CEO Jakob Stausholm.
The company has not disclosed how many died on board the aircraft, which seats 19 people. The plane crashed near Fort Smith in the Northwest Territories shortly after takeoff. Rio Tinto employs many remote workers, who operate in shifts at the mine. Because of its isolated location, the miner transports workers by aircraft to and from the deposit.
“I would like to extend our deepest sympathy to the families, friends and loved ones of those who have been affected by this tragedy,” Stausholm said. “As a company, we are absolutely devastated by this news and [are] offering our full support to our people and the community, who are grieving today. We are working closely with authorities and will help in any way we can with their efforts to find out exactly what happened.”
Northwest Territories Premier R.J. Simpson also mourned the loss.
“It is with a heavy heart that I express my deepest condolences to the families, friends, and loved ones of those who were aboard the Northwestern Air flight that crashed outside of Fort Smith today,” he noted. “The impact of this incident is felt across the territory…. As we seek to understand the circumstances of this tragedy, I’d also like to extend a heartfelt thank you to the first responders and rescue teams who continue to work tirelessly at the crash site.”
It is unclear whether the crash will impact diamond production or sales at Diavik.
Botswana Diamonds has announced that a gravity survey has been completed over four high-grade geophysical targets that had good magnetic response in a previous survey undertaken by the company.
“Preliminary results from this gravity survey show that at least one of the four targets, which is located 6 km south of the existing KX36 diamond discovery, has an excellent gravity response like that of known kimberlites and similar in size to KX36. The survey on the KX36 size anomaly is being repeated and correlated with previous results for confirmation. Next steps will be a drilling plan.
The new kimberlites targets have great potential to upgrade the existing resources in the area, including at the Ghaghoo Mine, which is currently under care and maintenance and only 60 km away from the KX36 project.
The KX36 project is a 3.5 ha kimberlite pipe in the Kalahari. The pipe has resources of 17.9 Mt at 35 cpht and 6.7 Mt at 36 cpht at $65 /ct. The modelled grade range is 57-76 cpht at an estimated diamond value of up to $107/ct.
Botswana Diamonds Chairman, John Teeling, commented: “This is the first strong indication of additional kimberlites around the KX36 discovery. Kimberlites come in clusters, but extensive exploration has to date not been successful.
“The anomaly has a strong gravity signature which gives us confidence that when drilled, it will prove to be a kimberlite. The anomaly sits on a structure like all the other kimberlites in the Kalahari, which further increases confidence. It is early days but very good news”.
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.
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 fiancee 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)
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.
