De Beers – Page 17 – The Diamond Certification Laboratory of Australia (DCLA)

De Beers sales show steady recovery in diamond market

De Beers, the world’s largest diamond producer by value, said on Wednesday that its latest sale of roughs yielded 40% more revenue than the seventh cycle, which already was more successful than the previous event.

The Anglo American unit, which sells diamonds to a handpicked group of about 80 buyers 10 times a year at events called “sights”, sold $467 million worth of rough diamonds in the eighth cycle, compared to $320 in the previous one.

The results bring De Beers’ total revenue from rough diamonds in the second half of 2020 to more than $900 million.

De Beers’ chief executive Bruce Cleaver said that while the demand increase was encouraging, it was too early to be sure of a sustained recovery in trading conditions.

“We continue to see a steady improvement in demand for rough diamonds in the eighth sales cycle of the year, with cutters and polishers increasing their purchases as retail orders come through ahead of the key holiday season,” Cleaver said in the statement.

The strong figures are further evidence of improving demand for rough diamonds, according to said BMO analyst Edward Sterck. He warned, however, that there is a significant accumulation of upstream diamond inventories, which could suppress the recovery if liquidated too soon and too quickly.

“Maintaining good diamond prices through the recovery will depend upon the pace at which the inventory is unwound, with De Beers and Alrosa holding the keys to the bulk of this inventory,” Sterck wrote in a note to investors.

The analyst also said the fact De Beers only provided a revenue figure meant it was unable to gauge how prices were trending.

Lower prices, more flexibility
De Beers has continued to implement a more flexible approach to sales during the sixth and seventh sales cycles of the year, as a result of restrictions triggered by the pandemic.

The usual week-long sight holder events have been extended towards near-continuous sales.

It has also cut prices of its stones, sometimes by almost 10% for larger diamonds, in an effort to spark sales.

Before the price reduction, De Beers had made major concessions to their normal sales rules — allowing customers to renege on contracts and view diamonds in alternative locations.

Along with Russia’s Alrosa, the world’s top diamond producer by output, it has also axed supply of roughs to the market, but built up their own stockpiles.

The diamond giant noted that despite ongoing efforts, it expected it would take “some time” to get back to pre-pandemic levels of demand.

De Beers and Alrosa’s view is shared by many in the industry. India, which polishes about 90% of the world’s rough diamonds, expect the slump in exports to be worse this year than in 2008.

Colin Shah, chairman of the Gem & Jewellery Export Promotion Council, told Bloomberg News on Wednesday that overseas sales of cut and polished diamonds may slump 20% to 25% in the year ending March from $18.66 billion last year.

Source: mining.com

De Beers Reduces Prices of Smaller Rough

De Beers lowered prices of rough diamonds below 1 carat as the positive sales momentum that began last month continued during this week’s sight, sightholders told Rapaport News.

The reductions for the September sight are between 5% and 10%, and follow the miner’s August price cut for rough above 1 carat.

De Beers and rival Alrosa had maintained prices throughout most of the pandemic to avoid flooding the market and devaluing inventories. This deterred many customers from buying, as they perceived the prices to be too high relative to polished prices, which had slumped during the crisis. Both companies finally reduced prices last month as polished demand had picked up ahead of the holidays and shortages emerged after months of low manufacturing activity.

“The prices had to be readjusted, because polished prices have fallen and rough prices did not fall,” a sightholder said Wednesday on condition of anonymity. “Now they’ve recalibrated the price according to today’s market environment. It shouldn’t affect polished prices much, but it [puts] profitability back in the rough.”

De Beers’ sales value at this week’s sight will be similar to last month’s, when the company brought in $320 million, rough-market sources predicted. Sentiment has risen and Indian manufacturers are seeking goods to polish ahead of the November Diwali festival, which is usually a period of shutdown for the sector.

“[Manufacturers] have reduced their polished inventory and want to increase the prices of their polished inventory,” another sightholder said. “They have liquidity because of the lower inventory and production in the last few months. So people are quite [keen] to manufacture. Hopefully the momentum will go on for a few months.”

Source: Diamonds .net

De Beers sales hint diamond market has bottomed out

De Beers thinks the recovery is at an early stage and that it will take some time to get back to pre-pandemic levels of demand. (Image courtesy of De Beers Group.)
De Beers, the world’s largest diamond producer by value, revealed on Friday it made about three times as much in sales of roughs in the seventh sales cycle of the year as it did in the previous event.

The Anglo American unit, which sells diamonds to a handpicked group of about 80 buyers 10 times a year at events called sights, sold $320 million worth of rough diamonds in the seventh cycle. That compares to the $116 million fetched in the previous sight and is not far behind the $400 million De Beers sold on average each month last year.

The results, said BMO Analyst Edward Sterck, show the diamond market may have bottomed out and be on the slow road to recovery.

“Whilst the market has been defibrillated, we think it will remain in intensive care for some time, although any improvement is good news for the smaller pure play producers with weak balance sheets,” Sterck said in a note to investors.

De Beers chief executive Bruce Cleaver showed mild optimism, saying the recovery was at an early stage.

“The company, however, expects further market improvement as covid-19 restrictions continued to ease in various locations and manufacturers focus on meeting retail demand for polished diamonds,” Cleaver said in the statement.

The executive said that overall industry sentiment has become more positive as jewellers in the key markets, such as the US and China, gained confidence ahead of the important year-end holiday season.

The usual week long sight holder events have been extended towards near-continuous sales.

It has also cut prices of its stones, sometimes by almost 10% for larger diamonds, in an effort to spark sales.

Before the price reduction, De Beers had made major concessions to their normal sales rules allowing customers to renege on contracts and view diamonds in alternative locations.

Along with Russia’s Alrosa, the world’s top diamond producer by output, it has also axed supply of roughs to the market, but built up their own stockpiles.

The diamond giant noted that despite ongoing efforts, it expected it would take “some time” to get back to pre-pandemic levels of demand.

Source: mining.com

Covid-19 Ravages De Beers Sales

De Beers’ sales and production nosedived in the second quarter as the coronavirus crushed diamond demand throughout the pipeline and forced shutdowns at several mines.

“Demand for rough diamonds was significantly impacted by a combination of Covid-19 restrictions [affecting] consumer demand and access to southern Africa, as well as severely limited midstream cutting-and-polishing capacity due to lockdowns, particularly in India,” De Beers said Thursday.

Rough sales slumped 96% year on year to $56 million after the company canceled its March-April sight — the first of the quarter — and allowed clients to defer all May and June purchases to later in the year. Sales volume plunged 97% to 300,000 carats, and prices fell as well, the miner noted.

Most sightholders were unable to attend the usual sales in Botswana due to travel restrictions. The pandemic also affected international shipments.

Meanwhile, the shutdown of India’s manufacturing sector reduced rough demand: Factories in Surat, the country’s cutting hub, closed in March for around two months, and ongoing virus outbreaks have disrupted the reopening process.

De Beers’ rough production fell 54% to 3.5 million carats during the quarter as the miner lowered its output to reflect the weak demand. Measures by southern African governments to contain the coronavirus also limited the company’s ability to operate, with Botswana and South Africa accounting for a large proportion of its mining activities, alongside Canada and Namibia.

Sales volume for the first half of 2020 slid 44% year on year to 9.2 million carats, with the average selling price down 21% at $119 per carat. The company sold a higher proportion of lower-value rough than a year ago, and average rough prices across the period slipped 8% year on year on a like-for-like basis.

Despite these setbacks, De Beers maintained its production forecast of 25 million to 27 million carats for the full year. However, it will review this outlook based on Covid-19 disruptions and “the timing and scale of the recovery in demand,” it said.

Source: Diamonds.net

India Extends Import Curbs as Surat Shuts Again

Indian trade bodies have recommended continued limits on rough-diamond imports in July, with a fresh weeklong shutdown of the Surat cutting sector adding to concerns about the market.

The Gem & Jewellery Export Promotion Council (GJEPC) and four other organizations have called for the industry to avoid shipping rough into the country between July 10 and 31. They are giving companies a window of July 1 to 9 in which to import goods to keep factories operational, and will review the policy in the final week of the month, the groups said in a letter to members Tuesday.

“Over [the] last few weeks, manufacturing operations have commenced, albeit under several constraints because of issues [such as social distancing],” they noted. “In view of this, it was generally felt that some new raw materials would be needed for continuing operations and keeping the labor force employed.”

Weak polished demand during the coronavirus pandemic led to fears of a diamond oversupply, prompting the GJEPC, the Bharat Diamond Bourse, the Mumbai Diamond Merchants Association, the Surat Diamond Bourse and the Surat Diamond Association to call for a rough-import pause for a month from May 15. They later delayed it to June 1 so companies could complete outstanding shipments.

These initial curbs have helped reduce stockpiles and manage cash flow, while miners have also offered support by being flexible with contract clients’ purchasing obligations, the groups added. The GJEPC will write to the large rough producers, urging them to continue that policy to avoid a collapse in the value of inventory, the letter stated.

However, the industry must still “proceed with great caution,” the organizations warned following a Saturday meeting with trade members.

“It is difficult to say when the Indian diamond industry will be fully operational,” said GJEPC chairman Colin Shah. “The industry [has] resumed manufacturing activities in a limited way, while maintaining all the stringent safety norms. But these are unprecedented times.”

The trade must, therefore, strike a delicate balance between continuing operations and maintaining workers’ livelihoods on the one hand, and ensuring health and safety on the other, Shah added.

Surat closure

The sector suffered a setback on Monday when the Surat Municipal Corporation ordered the closure of all diamond-manufacturing units in the city for seven days, according to a note the Surat Diamond Association released on Tuesday. More than 700 diamond workers in Surat have tested positive for Covid-19 in recent weeks, with the polishing industry becoming a local virus hot spot, the Deccan Herald reported.

Diamond cutting in India has struggled to restart, even after the government relaxed the lockdown rules it introduced in March to contain the coronavirus. The Surat sector gradually reopened in May following a full closure, with the government allowing 50% of workers in factories and 33% in offices. But several outbreaks at manufacturing units have forced companies to shut again and send workers into quarantine.

Local media have carried reports of staff members attending work while unwell, with communal meals and the use of air-conditioning intensifying the risk of infection.

China dispute

Adding to the troubles, a diplomatic rift with Beijing has led to unsold memo goods being held up at Indian customs on their return from Hong Kong and China, traders told Rapaport News. The Indian government has reportedly told customs officials to check all imports from China following a June 15 military clash in a disputed Himalayan border region that killed 20 Indian soldiers and caused an unknown number of Chinese casualties.

Companies might need to route goods via other locations such as Dubai at extra cost to avoid the bottleneck, an executive at a diamond manufacturer explained.

“We have been instructed [by customs agents] not to export anything, specifically diamonds, from Hong Kong to India, as customs have completely refused to release those parcels,” he said. “I see a problem escalating, and if this situation doesn’t get under control in the next two or three weeks, there definitely will be an issue.”

Source: Diamonds.net

Buyers Snub De Beers and Alrosa over High Prices

De Beers and Alrosa continued to see rock-bottom sales in June as buyers rejected the miners’ high rough prices in favor of cheaper goods from smaller suppliers.

“[The major miners] want to hold on to prices, so people don’t see any [incentive] to buy because it’s difficult to sell and make money,” a sightholder told Rapaport News. “[Manufacturers and dealers] are already sitting on large inventories of polished and rough.”

The two largest producers have maintained their prices at pre-coronavirus levels, while other miners holding tenders in Antwerp have sold at prices 15% to 25% lower than in February, an Alrosa client observed. Even the smaller producers’ prices were inflated, he explained, as they were serving customers seeking specific items in small quantities.

If De Beers or Alrosa were to put their monthly allocations on the open market, they would fetch prices up to 30% below their current levels, the dealer estimated. “There is no appetite for rough, as factories [in India] have been operating on a very, very small capacity for a month,” he stressed.

“Sales of polished have not improved dramatically, and stocks are still there,” a sightholder added. “Factories have no reason to open, so why would we buy rough?”

De Beers held its June sight last week, with limited viewings in Antwerp instead of at the usual location in Gaborone, Botswana, due to Covid-19 travel restrictions. The sight had an estimated value of around $40 million, according to a source with knowledge of the sale. De Beers hasn’t released sales data since its February sight, and is scheduled to publish its earnings for the first half of the year on July 30.

Alrosa also struggled to attract buyers to its latest trading session, which ended June 15, after reporting record low revenues in April and May. The Russian miner is due to publish its June data on July 10.

Kick-starting sales

Rough buyers have sensed an increased urgency for both De Beers and Alrosa to increase revenue, after the miners allowed 100% deferrals of purchase allocations during the coronavirus crisis. They introduced that flexibility to protect prices and avoid flooding the market with goods, but now customers are unwilling to resume buying unless value improves. Five Alrosa clients have already given up their statuses as Alrosa contract customers since March, perceiving pressure to make purchases.

To drum up interest, Alrosa is considering holding contract sales outside Moscow for its July session, with Antwerp the likely venue, and is weighing up whether to continue its deferrals policy.

“Being committed to the prudent sales policy, in subsequent trading sessions of the year we will use all available instruments to maintain supply-and-demand balance and help to normalize cutters’ level of inventories,” an Alrosa spokesperson said. De Beers declined to comment.

Most manufacturers in India have enough rough to keep their factories going until August, and are only buying if they have specific shortages, dealers explained. That has boosted sales at smaller miners that are in need of liquidity and have sold low volumes at reduced prices to cutters looking to fill limited inventory gaps.

The recent increase in Covid-19 cases in Surat has added to the predicament, dealers asserted. The Indian polishing industry hasn’t returned to consistent operations since the government allowed it to reopen last month, with several companies forced into temporary shutdowns following virus outbreaks.

“Most [Alrosa] clients have the same attitude as me — they don’t need the goods, and they’re not ready even to look at the goods at this price,” a dealer said.

Gradual release

However, deep and sudden discounts on rough could damage the entire market, sightholders acknowledged. As such, they only foresee De Beers and Alrosa reducing prices when the market recovers, which the buyers expect to happen in the fall, assuming retail stores and trading centers continue to reopen. Only then will the largest miners gradually release their stockpiles, dealers predicted.

“Let [the goods] come in very small quantities, so in the meantime overall inventory will slowly decline, the industry will generate money, and banks will feel comfortable,” a dealer argued. “We will start our business from September onward, when the Christmas season begins.”

Indeed, buyers will have to return to De Beers and Alrosa if they need more significant volumes when the market improves.

“Maybe by then we will have more of a balance of supply and demand, and maybe we’ll have more confidence to buy at certain prices that we don’t have now,” a sightholder said.

Source: Diamonds.net

WDC Elects Feriel Zerouki as President from 2022

De Beers executive Feriel Zerouki will succeed Edward Asscher as president of the World Diamond Council (WDC) in 2022, the organization said Monday.

Zerouki, De Beers’ senior vice president of international relations and ethical initiatives, will become the first woman to head the WDC, which works to keep conflict diamonds out of the supply chain. Its board confirmed her election as vice president during a virtual meeting on Friday; according to WDC rules, she will automatically become president when Asscher’s current term ends two years from now.

Asscher, president of the Amsterdam-based Royal Asscher Diamond Company, took over at the WDC on Friday, stepping up from his previous position as vice president. He replaces Stephane Fischler, and will be serving his second term at the helm, after holding the role from 2014 to 2016.

The WDC board also confirmed the reelection of Ronnie Vanderlinden, president of the International Diamond Manufacturers Association, as treasurer, and the appointment of Udi Sheintal as secretary.

Source: diamonds.net

Don’t Ban Rough Buying, De Beers Urges

De Beers CEO Bruce Cleaver has called on the trade to allow rough purchases, assuring manufacturers the company won’t require them to buy in the weak market.

“We will only sell [rough] when the demand is such that it can create sustainable value for all of us,” the executive wrote in a blog post Friday. “However, just as we are not compelling our clients to purchase, we strongly believe it is counterproductive for any part of the industry to compel them not to purchase.”

Cleaver’s plea comes after the Gem & Jewellery Export Promotion Council (GJEPC) and other Indian trade organizations called on the nation’s diamond sector to pause rough-diamond imports for 30 days, beginning on May 15. The move would improve the Indian industry’s liquidity situation and deplete inflated polished inventories, the trade bodies explained.

Without explicitly referencing the Indian trade groups’ appeal to their members, Cleaver argued that supply had already been significantly reduced after De Beers suspended production at most of its mines. “Almost all other diamond producers have halted or significantly reduced supply, with some mines unlikely to return to production,” he added. De Beers cut its production guidance for 2020 to 25 million to 27 million carats, more than 20% below its initial projection, Cleaver noted.

The company also canceled its March sight and is offering 100% deferrals at sight 4, which begins Monday. Sightholders are likely to defer the vast majority of purchases to later in the year, as weak consumer demand and the shutdown of India’s cutting industry have diminished appetite for rough.

On Friday, India extended its nationwide lockdown by two weeks, raising the question of when diamond manufacturing would revert to normal, especially in the city of Surat, which produces more than 90% of the world’s polished goods.

Marketing message

Meanwhile, Cleaver urged the industry to capitalize on the diamond’s symbolism, as consumers will seek to purchase “fewer, but more meaningful things” as they move out of lockdown. Signs of pent-up demand from delayed weddings, and self-purchases to reward hardships that have been overcome, are starting to show in China as the lockdown there has eased, the CEO commented. People are visiting stores and shopping malls again, he said.

In its communication with consumers over the coming months, De Beers will emphasize the role diamonds play in shaping a better world and in forging meaningful connections, he stressed.

“Just as they have had to find innovative ways to stay connected with loved ones, we will find new ways to connect with them,” he said.

“Throughout time, the diamond has served as a powerful symbol of connection and meaning,” he wrote. “It has always been attached to life’s most precious moments and relationships and represented a store of value, but increasingly we believe a diamond is becoming a store of values.”

Source: Diamonds.net

De Beers Makes Dramatic Cut to Production Plan

De Beers has reduced its full-year production guidance by 7 million carats, putting the miner on course for its lowest output since 2009.

The miner expects to produce between 25 million and 27 million carats in 2020, compared to the 32 million to 34 million in its original projection, it said Thursday. The revised forecast for 2020 was due to the impact of the COVID-19 pandemic on mining activity and consumer traffic in key markets, the miner noted.

Rough-diamond production for the first quarter of 2020 slipped 1% to 7.8 million carats, roughly in line with the previous year. However, the coronavirus shutdown measures were not implemented at the miner’s sites until the end of the period, and had a limited impact on output, De Beers said.

Sales volume rose 19% to 8.9 million carats for the three months ending March 31. The increase was due to a favorable comparison with the same period the previous year, when demand was weak due to an oversupply of polished stones in the manufacturing sector. Additionally, the decline in demand caused by the pandemic — during which De Beers allowed customers to defer some of their allocations to the second quarter — was offset by higher appetite for lower-value goods, the company noted.

Production in Botswana declined 5% to 5.6 million carats, with diamond recovery at De Beers’ Orapa mine falling 7% as result of challenges in commissioning new plant infrastructure. Output at Jwaneng slipped 4% due to a planned shift to lower-grade ore.

Production in Namibia grew 6% to 511,000 carats, and in South Africa jumped 97% to 751,000 carats, as the final ore from the company’s open-pit operations at Venetia was mined prior to the transition to underground.

Output in Canada slid 19% to 844,000 carats, primarily due to the closure of the Victor mine, which reached its end of life in the second quarter of 2019. Output from Gahcho Kué, which the company owns in partnership with Mountain Province, rose 4% to 844,000 carats.

The first quarter featured two sales cycles, with proceeds falling 9% to $906 million. Demand reached a near-yearlong high in January, but fell again in February as the coronavirus began to spread. The company was forced to cancel its third site, which was due to begin at the end of March.

In 2009, the company slashed production by 49% to 24.6 million carats for the year when the global economic slowdown hit diamond demand.

Source: Diamonds.net

De Beers Cancels Upcoming Sight

De Beers has called off this week’s sight in Botswana, citing restrictions resulting from measures to contain the coronavirus.

Lockdowns in Botswana, South Africa and India are prohibiting sightholders from traveling and preventing the shipment of merchandise to clients’ international operations, De Beers said in a statement Monday. The company is letting sightholders defer 100% of their supply allocations to later in the year, as reported by Rapaport News on Thursday.

The miner “will continue to seek innovative ways to meet sightholders’ rough-diamond supply needs in the coming weeks,” it continued.

The sale was due to run from March 30 to April 3 in Gaborone. However, on March 16, Botswana banned entry to visitors from 18 countries, including US, China, India and Belgium — making attendance impossible for most sightholders.

Customers can usually buy De Beers’ rough remotely due to the consistency of the diamond assortments. However, demand is extremely weak as the manufacturing sector in Surat, India, has closed and the US retail market has largely shut down. In addition, the ability to transport goods around the world is limited. Sales were likely to be extremely low, rough-market sources told Rapaport News.

The unprecedented conditions prompted the World Diamond Council (WDC) and six major trade organizations to ask the CEOs of De Beers and Alrosa to consider offering complete flexibility on purchasing obligations. In a March 20 letter, bourses and trade groups in India, Belgium and Israel joined the WDC in urging the miners to treat the situation as a “force majeure” — an unforeseeable circumstance that prevents the fulfilment of a contract.

“With so many companies now down to a fraction of sales, it is imperative to keep the right balance to secure their short-term viability,” the organizations wrote.

Alrosa allowed more flexibility than normal at its March rough sale, enabling customers to defer 60% of their allocations. However, responding to the letter, it emphasized the importance of all industry participants supporting each other.

“COVID-19 is a new challenge for all of us, and it requires the industry from mine to retail to stand together and take joint innovative steps, not avoid them at the expense of others,” Alrosa CEO Sergey Ivanov wrote. “Walking away from mutual obligations is shortsighted.”

Source: diamonds.net