Petra Diamonds’ rough prices started to bounce back at its latest tender, indicating the market has “likely bottomed,” it said Thursday.
The company’s third trading session brought in $67.9 million from the sale of 519,397 carats, at an average price of $131 per carat. Prices were 19% higher on a like-for-like basis — comparing similar categories of diamonds — than at the fiscal year’s second tender, which ended in October.
Last week, the miner reported early results from the tender of $58.7 million from 462,794 carats, at an average price of $127 per carat. During the remainder of the tender, it sold an additional 56,600 carats for $9.3 million. That comprised 25,200 carats from the Cullinan and Finsch mines in South Africa, which yielded $3.1 million, and 31,400 carats from the Williamson mine in Tanzania, bringing in $6.2 million.
Total rough-diamond revenue for the first fiscal half, which included three tenders, came to $187.8 million, down 7% year on year, the company noted. Like-for-like prices for the six months fell 13% compared to the equivalent three tenders the year before.
US polished-diamond imports dropped 21% to $1.5 billion in October, recording a fifth consecutive year-on-year decline, according to recent data from the US Commerce Department. The decrease reflected a fall in the volume of imports as well as a lower average price. Polished imports have not seen a year-on-year rise since May, when the timing of the JCK Las Vegas show prompted an 18% increase.
Source: US Commerce Department data; Rapaport archives.
About the data: The US, the world’s largest diamond retail market, is a net importer of polished. As such, net polished imports — representing polished imports minus polished exports — will usually be a positive number. Net rough imports — calculated as rough imports minus rough exports — will also generally be in surplus. The nation has no operational diamond mines but has a manufacturing sector, so it normally ships more rough in than out. The net diamond account is total rough and polished imports minus total exports. It is the US’s diamond trade balance, and shows the added value the nation creates by importing — and ultimately consuming — diamonds.
India saw a slump in polished-diamond exports but an increase in rough imports in October as global demand remained slow and manufacturers brought goods into the country ahead of a two-month shipment freeze.
Polished exports fell 33% year on year to $1.26 billion, the Gem & Jewellery Export Promotion Council (GJEPC) reported earlier this month. Inbound rough shipments rose 9% to $1.02 billion despite a two-month voluntary pause on imports aimed at reducing inventories. The policy came into effect on October 15.
A decline in rough prices ahead of the optional freeze and the Diwali holiday created an opportunity for Indian companies to buy, added GJEPC chairman Vipul Shah.
About the data: India, the world’s largest diamond-cutting center, is a net importer of rough and a net exporter of polished. As such, net polished exports — representing polished exports minus polished imports — will usually be a positive number. Net rough imports — calculated as rough imports minus rough exports — will also generally be in surplus. The net diamond account is total rough and polished exports minus total imports. It is India’s diamond trade balance, and shows the added value the nation creates by manufacturing rough into polished.
A 3.06-carat pink diamond ring will be the star of an upcoming jewelry sale at Heritage Auctions, where it is set to fetch as much as $300,000.
The modified marquise-shaped, fancy-pink stone, surrounded by 0.55 carats of full-cut diamonds, will lead the December 4 Holiday Fine Jewelry Signature Auction in Dallas, Texas, Heritage said Monday.
Other standout items include pieces by Cartier, Van Cleef & Arpels, and Tiffany & Co., and diamond earrings created in 1950 by Parisian jeweler Jean Schlumberger. One of the more interesting lots is an enamel and 18-karat gold helicopter by Pierno Frascarolo & Co.
Here are some of the other top items:
A ring by designer David Webb features a pear-shaped, 18.65-carat Ceylon purple sapphire, 9.35 carats of full-cut diamonds and a turquoise cabochon, estimated at up to $80,000.An emerald-cut, 4.62-carat, H-color, VS1-clarity diamond ring is expected to fetch up to $75,000 at the auction.This ring is set with a cut-cornered rectangular-cut, 5.57-carat, fancy-intense-yellow, VS1-clarity diamond center stone, flanked by tapered bullet-shaped white diamonds and rectangular-shaped emeralds. It carries a presale price range of $50,000 to $75,000.Heritage will offer this cushion-shaped, 19.51-carat sapphire and diamond ring for $50,000 to $70,000.
Ahmed bin Sulayem, who this week was elected to take charge of the Kimberley Process, a multilateral body tasked with cleaning up the diamond trade, said any proposed scheme “must take into account African diamond producing nations” such as Botswana, the Democratic Republic of Congo and South Africa.
But the Emirati warned that a Belgian proposal to put restrictions on the international trade of diamonds, which the G7 is considering adopting, “falls well short of this important goal”.
The EU’s chief diplomat Josep Borrell last week said the bloc was set to move ahead with a ban on Russian diamonds after securing sufficient backing from the G7 group of developed nations.
The diamond dispute is only the latest rift between Europe and African capitals. A ministerial meeting set for next week has been postponed after officials decided there was little chance that the two sides would agree on a joint communiqué containing language regarding Israel’s war against Hamas and Russia’s war in Ukraine, according to three people briefed on the discussions.
Visit rapaport.com/sanctions for facts and support. Martin Rapaport will fast for three days next week — Tues.-Thurs., Nov. 7-9 — to protest WDC’s support for Kimberley Process that certifies Russian diamonds. Trade is urged to fast for one day, Tuesday, Nov. 7, as WDC and KP meet in Zimbabwe. Prices of rounds stabilizing; 1 ct. RAPI +0.3% this week but -2.2% for Oct. Fancies still falling. Surat factories to close for three weeks over Nov. 12 Diwali holiday. NY DDC to hold Israel trade week Nov. 27-30.
The diamond sorting center in Mirny, Sakha Republic, Russia, November 14, 2013.
De Beers has put its weight behind the World Diamond Council (WDC) plan for sidelining Russian goods amid continued controversy over the competing proposals.
“In pursuit of a collaborative, coherent and collective solution that supports the aims of the G7, we have joined with 22 diamond-industry organizations through the World Diamond Council to progress the ‘G7 Diamond Protocol’ proposal,” De Beers CEO Al Cook wrote in an open letter to Group of Seven (G7) leaders on Thursday. “
The protocol — one of a few plans for keeping Russian diamonds out of G7 nations — calls for importers to declare on invoices that stones do not originate from mining companies operating in Russia. The companies making the claims will undergo audits.
While the WDC-led proposal has received wide industry support, it has also drawn criticism for creating a burden for small-scale industry members — including by Rapaport Group Chairman Martin Rapaport.
One other plan, from the Belgian government and supported by the Antwerp World Diamond Centre (AWDC), proposes using technology to confirm the source of goods, with the European city as a suggested center point for the trade of stones with known provenance.
Two further proposals — from India and a French jewelry group — were also on the table at a G7 meeting on Thursday, Reuters reported.
In another letter earlier this month, the African Diamond Producers Association (ADPA) attacked the process for not consulting people on the continent and claimed some of the plans would harm its members and artisanal miners. It highlighted the “G7 Certificate Scheme” — an apparent reference to the Belgian plan — as well as the WDC protocol.
“The proposed changes will bring supply-chain disruption, added burden, and costs to the ADPA mining nations,” the ADPA wrote in the October 13 letter to the Zimbabwe Minister of Mines and Mining Development, Soda Zhemu, who is chairing the Kimberley Process (KP) this year.
The plans will set a precedent for segregating diamonds by origin and damage producing countries’ ability to cut and polish their rough, the group argued.
In the case of the Belgian proposal, “additional costs will be incurred when a parcel of rough diamonds needs to be first shipped to Antwerp to then be reshipped to the country of origin to be polished,” said the Angola-based ADPA, which represents 19 countries that together account for 60% of global rough production.
Efforts to sift Russian diamonds out of G7 markets have taken on momentum since the bloc — which comprises Canada, France, Germany, Italy, Japan, the UK, the US, and the European Union — pledged to “work closely together to restrict trade” in those goods in May.
Where Are All the Russian Diamonds?
However, while there has been agreement about the need to stop Russia obtaining diamond revenues to fund its war in Ukraine, the process of implementing this has proven complex.
“Throughout our discussions, two things have been clear: why we should do this is easy, but how we should do it is hard,” said Cook.
The executive called for G7 leaders to obtain input from the industry and not exclude relevant groups, including artisanal miners.
“We look forward to further engagement with the G7 around the World Diamond Council proposal and urge those that have submitted proposals to work together to create an effective and practical solution,” Cook continued.
The industry had expected any measures to go into effect in January 2024. However, that schedule is now looking unlikely, JCK reported Friday, citing sources involved in the plans.
“We fully agree with Al [Cook]’s view that the results of our efforts to meet the G7 objectives should be collaborative, coherent and collective,” said WDC executive director Elodie Daguzan in a statement to Rapaport News. “In [the] WDC’s own words, it is what we call ‘an industry proposal that is effective and implementable now and that leaves no one behind.’ Also, we understand that the statement made by ADPA is not against the WDC-facilitated protocol but rather against the G7’s objectives without engagement with African producers.”
Western officials are expected to head to India this week to discuss the technical aspects of a coming G7 ban on Russian diamonds as they come closer to finalising a sanctions package that may kick in as early as January 1.
But sanctions experts have warned that negotiations may drag on past the expected deadline due to the complexity of enforcing a widely accepted mechanism to trace the origin of diamonds.
“If this mechanism is understandable and transparent enough from the beginning, then there are high chances that all G7 countries will sign off on it,” Yuliia Pavytska, who heads the sanctions team at the KSE Institute, a Kyiv School of Economics-affiliated think tank, told The National.
“If there is no agreement in the coming weeks, it will likely take a few more months to make it happen.”
The impact of a ban on the Russian economy would be relatively small but not insignificant.
Russia’s diamond exports account for about $4 billion – or about 1 per cent – of the country’s total exports, according to Ms Pavytska.
But with half of Russia’s exports comprising oil and gas, diamonds are one of the largest trade groups that have yet to be sanctioned.
“There’s been talk for months about a diamonds ban, and now we finally see that the G7 is ready to discuss it and adopt it,” she said.
Belgium has long resisted a ban on Russian diamonds due to their importance for its second-largest city, Antwerp, the largest diamond hub in the world.
But it has recently put forward a proposal that is garnering support among the G7, which may finalise its proposal in the coming weeks. This would be followed by an implementation of the ban at the EU level next year.
As discussions intensify, western officials are expected to travel later this week to India, the world’s diamond-polishing hub, for what EU authorities have described as a fact-finding mission organised by the Indian Gem and Jewellery Export Promotion Council.
Speaking to Reuters last week, US officials said that he delegation would travel to Mumbai and Surat, a city where about 80 per cent of the world’s diamonds are polished.
Belgian officials will reportedly be part of the delegation.
Belgium’s proposal Belgium is not a member of the G7 but is part of the EU, which is represented in the forum that also includes the US, the UK, Canada, France, Germany, Japan and Italy.
The US, the UK and Canada have already banned Russian diamond imports in various ways.
Belgium argues that an outright G7 ban would encourage circumvention, pointing to the fact that while imports of Russian diamonds to the EU have decreased by 95 per cent from pre-war levels, the number of diamonds being traded in Antwerp has not significantly changed.
These figures have fuelled suspicion that Russian diamonds are changing identity before entering western markets.
Experts such as Agiya Zagrebelska, who heads the sanctions direction at the Ukrainian National Agency on Corruption Prevention, said that there has been an increase in purchases of Russian diamonds from companies based in major trade hubs including India and the UAE.
“What is being sold on western markets are Russian diamonds because it’s impossible that the diamonds traded by these companies come out of nowhere,” Ms Zagrebelska told The National.
The Belgian diamond industry has called for the creation of an improved system to track diamonds – a notoriously difficult process.
Rough diamonds are split before they are polished and then possibly mixed with other diamonds.
The proposal focuses on reinforcing traditional customs inspections with blockchain technology to create a ledger that is impossible to forge.
The aim is to cut Russian diamonds off from the G7 market, which represents more than 75 per cent of the diamond consumer market, and forcibly drive their price down.
“The ban on Russian diamonds will not only reduce the revenue Russia is extracting from the export of diamonds but will simultaneously increase the traceability of diamonds at a global level, which has been a long-standing EU policy ask,” an EU official said.
There are other proposals reportedly under discussion, but the diamond lobby has remained tight-lipped about them.
“We understand that it all depends on what trace and track system the G7 countries will choose,” said Ms Zagrebelska.
The Antwerp World Diamond Centre declined to comment when contacted by The National.
The US-based World Diamond Council did not answer a request for comment.
Alrosa has canceled its next two sales and urged caution from buyers and suppliers amid a steep downturn in the diamond market.
The Russian miner informed India’s Gem & Jewellery Export Promotion Council (GJEPC) of the decision in the past few days, citing low demand. The move follows the GJEPC’s recent call for rough producers to act responsibly.
“Alrosa has decided to temporarily halt the allocation of rough diamonds in September and October 2023,” the company said in a note to the GJEPC, seen by Rapaport News. “We believe that this approach is going to have a stabilizing impact by strengthening the market’s supply-and-demand balance. This will aid the prevention of overstocking, especially with manufacturers closed for Diwali.”
Alrosa has continued to sell despite being under US sanctions since the Ukraine war began in February. The company’s revenue was broadly stable year on year at RUB 188.16 billion ($1.9 billion) in the first half of 2023.
Most of the rough goes to India, market insiders believe. That country’s diamond trade has suffered a serious crisis because of weak US and Chinese demand and competition from lab-grown stones. Inventories have piled up as the sales slump has outpaced manufacturers’ production cuts, leading to falling prices.
The GJEPC wrote to diamond miners earlier this month, asking them to be “responsible” when selling to prevent a worsening of the situation. In response, Alrosa said it “expresses equal concern and strives to reverse the existing trend of diminishing demand.”
The Russian company said it would welcome a similar position from other industry players, such as miners, cutters and retailers, “on the matter of rough-diamond purchases and sales” as a “reciprocal effort.”
The benefits of the miner’s decision should be visible in the market by the beginning of next year, it said in a separate statement Wednesday.
“Alrosa has always followed the practice of supporting market stability and leveling its volatility,” a spokesperson for the miner said. “Our solid and high-quality asset base and stable financial position allow us [to implement] such measures.”
By contrast, De Beers will continue to hold sights but take a “responsible approach” to sales, “just as we have previously when faced with challenging industry conditions,” a spokesperson for the Anglo American unit said. The company, which is holding its September sight this week, has already allowed customers to defer up to half of rough purchases for the rest of 2023.
“We will focus on additional supply flexibility as necessary to meet sightholders’ evolving requirements,” the De Beers spokesperson added.
The news comes amid growing expectations for a Group of Seven (G7) ban on Russian diamonds, with an announcement likely in two to three weeks, Reuters reported last Friday, citing Belgian officials. The World Diamond Council (WDC) is also facilitating a proposal for keeping Russian and non-Russian diamonds separate.
Sanctions-hit Alrosa, the world’s biggest diamond-producing company, said on Sunday it has mined the largest gem-quality diamond in Russia in the past decade.
The 390.7-carat diamond was mined at one of the company’s mines in the Republic of Sakha, Alrosa said in a statement. The region, commonly known as Yakutia, lies in Russia’s Far East along the Arctic Ocean.
“The found diamond is a light crystal of an irregular shape, bordered by a yellow-brown halo – a combination of mass, shape and colour that is unique today,” Alrosa said.
The company mined the largest gem-quality diamond in Russia in 2013, weighing 401 carats, Alrosa said.
The world’s largest gem-quality diamond ever mined – the 3,106-carat Cullinan stone – was recovered in South Africa in 1905.
Alrosa was last year placed under sanctions by the United States, which cut it off from its banking system and banned direct sales to the US market after Russia invaded Ukraine.
Last month the company reported a rise of 0.2% in revenue for the first half of the year but said net profit fell 35% year-on-year to 55.6 billion roubles.
