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The US trade war with Beijing has wiped out sales targets of the world’s largest diamond producer Alrosa in China and hit purchases by the country’s tourists in the west.

“When there’s any political instability or tensions, luxury goods sales immediately react, including jewellery with diamonds,” chief executive Sergei Ivanov of the Russian diamond miner said in an interview with the Financial Times. 

“We thought our sales growth in China would go up by 2 or 3 per cent, but now the outlook is likely more pessimistic — growth rates will either be neutral or slightly negative.” 

Mr Ivanov has backed a push into China, which analysts expect to drive growth in the diamond market in the next decade along with India, as Alrosa seeks to meet demand from China’s burgeoning middle class. 

The state-owned company, which produces about half the world’s rough diamonds along with De Beers, is attempting to catch up with its rival and has raised China sales from $50m to $200m in recent years. 

But headwinds from the US-China trade war and a broader market slump are hitting the industry’s profits.

Alrosa’s revenue fell 27 per cent year-on-year to Rbs70.5bn in the first quarter of 2019. Anglo American, the owner of De Beers, blamed a 6.3 per cent decline in its most recent sales period last month on a “more challenging environment” in China. 

The industry is also facing a supply glut that has tempered demand for polished stones, which analysts at Russian investment bank VTB Capital expect to decrease by 2 per cent this year and remain poor until 2021. 

Mr Ivanov said Alrosa would continue to favour price over volume despite the struggles. “We could cut the price by 10 per cent and sell everything we have, but we won’t help the market by doing that because it’d lead to prices on diamonds in the midstream falling.”

He predicted that Alrosa’s sales, which fell 38 per cent year-on-year to $988m in the first quarter this year and had continued to slump since, would continue to remain “much worse” than 2018 before normalising in the fourth quarter this year. “In the end, Christmas in the US and Chinese new year in February aren’t going anywhere. There’ll be good demand and the market will normalise,” he said. 

The slump has not deterred Alrosa from seeking new avenues for production, with its existing reserves, mostly located in Yakutia in northeastern Russia, set to run out by 2047. Mr Ivanov said new ones will probably be discovered in the near future. 

Half a world away, Alrosa opened operations in Zimbabwe this year and is increasing its presence in Angola, where it has a stake in Catoca, the world’s fourth-largest mine, and developing the $1.5bn Luaxe kimberlite project, which is expected to be even larger. 

The company has ramped up its African operations even as other foreign nationals have stopped operating or wound down their presences in Zimbabwe and Angola. 

The move comes as Russia has raised its presence in Africa through further investment in raw materials from oil to bauxite, arms sales and security advice.

Alrosa signed its deal to enter Zimbabwe after president Emmerson Mnangagwa visited Moscow this year, ahead of a larger Russia-Africa summit scheduled in Sochi on the Black Sea for October. 

But Mr Ivanov said Alrosa’s interest in the continent was entirely geological. “Reserves in other African countries have all been researched and the chance of finding a large deposit there is close to zero,” Mr Ivanov said. 

Alrosa has also overcome suspicion of Russia to grow its operations in the US, where it has reopened a New York office, increased rough diamond sales, and plans to begin selling polished diamonds.

Mr Ivanov said that 70 per cent of investors in its recent $500m bond issue were western-based, while about half the company’s free float was owned by US entities. 

“Investors don’t bring up sanctions at all any more,” he added. 

Source: ft.com

In a lab in the California city of Carlsbad, between Los Angeles and San Diego, a suspicious diamond recently arrived.

On the outer edge – what jewellers call the girdle – was a tiny inscription, of a bona fide diamond security code issued in 2015.

But the font was a different one than the Gemological Institute of America, or GIA, uses.

And whereas the original diamond was natural, this diamond was grown in a lab.

“Rarely do we encounter the type of blatant fraud described here,” say Christopher Breeding and Troy Ardon from the Carlsbad lab.

Carlsbad is the headquarters of the GIA, a non-profit organisation that evaluates and certifies diamonds for quality.

It assigns diamonds report numbers, which a laser can then carve on to the diamond. But this method has its problems.

“It is easy to be removed, just polish it off,” says Andrew Rimmer, chief executive of Opsydia, an Oxford University spin-out. “Also it’s easy to apply someone else’s serial number.”

So Mr Rimmer has been working on lasers that can write security codes beneath the surface of diamonds instead.

And codes inside diamonds are forever.

Diamonds are a huge business, with 133 million carats (about 27 tonnes) of rough diamonds worth about $15bn-$16bn (£12bn-£13bn) mined each year, according to Boston consulting firm Bain & Company.

About half originate in Africa, where in some countries, like South Africa and Botswana, mining is well regulated.

But Zimbabwe, under President Mugabe, used diamond exports to fund its repressive secret police.

And last year, three Russian journalists were killed while investigating the Kremlin’s links to militias in the Central African Republic who fund their fighting with diamond sales.

Synthetic diamonds are also an issue for the industry – adverts have appeared on China’s Alibaba e-commerce site with documentation stating they are natural.

Such concerns have taken the shine off diamond sales in 2019.

In response, many people in the diamond industry have been working on using the blockchain – a tamper-proof distributed ledger – to store information on a gem’s history, from the mine to the jewellery shop.

Examples are Australia’s Everledger and De Beers’ Tracr. Russian diamond mining giant Alrosa announced last autumn it will join the Tracr platform.

So it will be possible to “provide clients with a full history of a diamond, starting from the moment it was mined”, says Alrosa’s Eugeniya Kozenko.

“We can create lots of apps along the way” that draw on the blockchain, says Jim Duffy, chief executive of Tracr.

The hardest bit has involved creating robots for producers to use to scan diamonds at scale, and machine-learning algorithms to automate identifying the diamonds, Mr Duffy says.

De Beers also has launched a GemFair progamme to log diamonds produced by small-scale African miners, says Michillay Brown, partner relations specialist at Tracr.

The programme started with “artisanal and small-scale diamond miners in Sierra Leone”, and helps them record GPS locations for each diamond they find, which they then place in a QR-coded tamper-proof bag, she says.

In another sign that the sector is warming to blockchain tech, Lucara Diamond, a Canadian mining company, bought a blockchain business called Clara last year.

Their diamonds will “get scanned shortly after they’re recovered from the mine, and put on blockchain,” says John Armstrong, Lucara’s vice president for technical services.

Putting a full account of a diamond’s provenance on to a blockchain offers an “extremely secure way of storing detailed information”, says Opsydia’s Mr Rimmer. “But you still need to make sure the stone is the one it purports to be.”

So how can you write a permanent, tamper-proof security code inside a diamond?

With difficulty would seem to be the answer. Diamond has a high refractive index, meaning it bends light a lot.

“So whichever direction you want a laser to go, usually it goes somewhere else,” Mr Rimmer explains.

Engineers at Oxford were doing research around getting the highest possible resolution from telescopes, and compensating for fluctuations in the atmosphere.

And this turns out to produce answers that also apply to focusing lasers on targets that are very small.

So marks as small as one-thousandth of a millimetre can be made 0.15mm below a diamond’s surface in a trillionth of a second. The extremely high speed keeps the laser burst from heating up the stone.

Marks this small can’t be seen even with a jeweller’s magnifying glass, or loupe. You need a powerful microscope.

And since they’re so tiny, they don’t have to be on the outside girdle, which is covered up when the diamond is placed in jewellery, but can be in the top surface or around the crown where they can always be read.

Opsydia has just sold it first machines to De Beers.

But once you can write things inside diamonds, “you can write electrical circuits; it takes you into science instrumentation and ultimately quantum computing,” says Mr Rimmer.

Maintaining trust in the authenticity and provenance of diamonds is essential to keep an increasingly sceptical public buying.

Ajay Anand, founder of New York-based Rare Carat, built a platform that pulls in data on diamonds for sale from both big and small retailers.

He realised that “diamonds are the perfect data set for machine learning and price prediction”.

There are about 30 or 40 variables associated with any diamond, he says.

“So we put together the largest data set probably in existence – our algorithms can predict the price of a diamond pretty accurately,” he says.

The platform tells customers how good a bargain it thinks a particular diamond is.

And “we’re empowering dozens of smaller online and local retailers, with lower overhead costs,” but who might struggle to get customers through the door, he says.

The industry will be hoping that these new marking, tracing and buying technologies will ensure diamonds never lose their lustre.

Source: bbc.com

A Frenchman was sentenced Thursday in Belgium to five years in prison for his role in a spectacular $50 million diamond heist at Brussels airport in 2013.

Smiling, Marc Bertoldi, 48, replied “thanks, goodbye” after the presiding judge told him he had one month to appeal his jail sentence and a 6,000 euros ($6,800) fine.

The February 18, 2013 robbery, one of the world’s biggest diamond thefts, saw a gang of armed men posing as police seize the gems from a passenger plane in an operation that lasted barely six minutes without a shot being fired.

The hooded men, armed with machine guns, pulled up in a car on the runway at Brussels’ main Zaventem airport where an armoured vehicle had just unloaded diamonds onto a plane about to take off for Zurich.

The men forced open the hold and removed about 120 boxes of diamonds before making off with the haul of about $50 million dollars (worth 37 million euros at the time) in gems, most of which were never recovered.

Some gold and precious metal in powder form were also stolen.

More than 30 people were detained in Belgium, France and Switzerland in massive coordinated police operations.

Last month, Bertoldi denied he had taken part in what the Belgian media called “the heist of the century,” telling the court he had only received some of the stolen diamonds.

But the presiding judge, reading the sentence on Thursday, said Bertoldi, an athletic man who wore jeans and a dark shirt, had in fact been “an indispensable cog” in the theft.

The judge said Bertoldi nonetheless “did not personally participate in all the offences committed,” particularly the theft of cars that were later set on fire.

– ‘Not the mastermind’ –

Bertoldi’s lawyer Dimitri de Beco told AFP: “It’s clear. He is not the mastermind of the robbery. That gives us some satisfaction.”

In addition to European cities, the investigation was also carried out in Casablanca, Morocco, where Bertoldi lived in 2012 and 2013.

The probe showed the many telephone contacts Bertoldi, who was arrested in France in May 2013, had before the heist with the presumed mastermind, Houssein Bajjadi of Brussels.

Bajjadi and the 17 other accused identified by Belgian authorities are due to be retried at the end of 2019 or early 2020 after the prosecution appealed their acquittal last year.

Before the airport heist, Belgium had experienced several spectacular robberies involving diamonds and precious gems.

In February 2003, jewellery and diamonds valued at about 100 million euros were stolen from an Antwerp diamond exchange.

More than 120 safes in the port city’s Diamond Center, a heavily protected building in the heart of the diamond district, were emptied unnoticed.

In 2013, a gang of hooded men pulled off one of the world’s biggest diamond thefts at Brussels’ main Zaventem airport.

Source: Agence-France Presse