De Beers – Page 23 – The Diamond Certification Laboratory of Australia (DCLA)

De Beers Plans Overhaul of Supply Policy

De Beers plans to abandon its practice of using sightholders’ purchase history as the main factor in determining how it allocates rough supply, sources have told Rapaport News.

The move, which would go into effect from 2021, would see the miner shift to more subjective criteria for deciding the value of goods each client receives.

The current system, known as “demonstrated demand,” requires sightholders to buy the rough that De Beers has allotted them or risk losing access to De Beers’ diamonds in future. The method has faced criticism for encouraging dealers and manufacturers to take on unprofitable inventory.

But with the current sightholder agreement expiring at the end of this year, De Beers has told clients demonstrated demand will not be the main driver of allocations in the new contract period, the sources said. Discussions about the matter continued at this week’s January sight in Botswana.

The proposals include studying data about clients’ business activities, as well as qualitative factors, to help determine whether companies should be on the client list, a sightholder explained on condition of anonymity. De Beers is also considering reducing the number of sightholders, according to a Bloomberg report last week that Rapaport News could not corroborate.

“We will be communicating directly with customers in the coming months about the new sightholder contract period, which will focus on maximizing the considerable opportunities ahead in the diamond sector,” a De Beers spokesperson said. The company would not elaborate on the details.

The midstream’s accumulation of excess inventory contributed to a severe slowdown in the diamond market in 2019, with De Beers’ full-year sales falling 25% to $4.04 billion. Last July, Dutch bank ABN Amro wrote to its clients urging them to buy rough only when it’s profitable, and attacked the practice of making purchases purely to maintain supply allocations.

Sightholders are expecting this week’s De Beers sale — the first of the year — to be relatively large as the trade replenishes its stocks following a solid holiday season. De Beers raised prices in certain categories, sources said.

Soucre: Diamonds.net

De Beers Issues Synthetics Guidelines

De Beers has provided its rough-diamond clients and Forevermark partners with guidelines on how to operate in the lab-grown market if they wish to continue tapping into its branding.

The mining company, which in 2018 forayed into gem-quality synthetics with the launch of its Lightbox brand, is demanding businesses make full disclosure about their product, segregate synthetics from their natural supply, and do not make unproven claims about either category. The “Statement of Principles” outlines the legal structures companies with lab-grown diamond units must have if they wish to use the sightholder logo, as well as the procedures and training they are required to implement to avoid contamination or misleading marketing.

While De Beers already had rules mandating disclosure and other best practices, the new principles “ensure there is no room for doubt” about how clients may use the sightholder logo, explained David Johnson, head of strategic communications for De Beers. Some of the rules form part of De Beers’ contract with clients, allowing the miner to penalize those who flout them, while others are only recommendations.

“We believe the principles within the document set out a responsible approach, and that they are important for ensuring people can make clear and informed choices about what they are buying,” Johnson added.

The document refers to lab-grown diamonds as “artificial” products that “do not have the same inherent, naturally occurring characteristics or enduring value” as natural diamonds. The miner continues to define diamonds as a natural mineral in line with the International Organization for Standardization (ISO).

De Beers sent the guidelines to clients earlier this month, as numerous sightholders have launched lab-grown businesses under separate entities and trading names.
The following is a summary of the guidelines:

De Beers customers may only use the sightholder license — including displaying the sightholder logo — for business entities that are exclusively natural-diamond businesses. Entities with both natural and lab-grown activities may not use the logo.
The miner recommends setting up distinct and independent businesses for any lab-grown diamond activities, with separate systems, processes and workforces.
The rules prohibit “false, misleading or unsubstantiated” claims about the enduring value of lab-grown diamonds, whether directed at other businesses or at consumers. They cannot state or imply that lab-grown diamonds have the “identical inherent value characteristics” as natural diamonds.
Similarly, unproven claims about the environmental benefits or ethical advantage of lab-grown diamonds over natural ones are forbidden.
Sellers must provide the buyer with full and unambiguous disclosure before the transaction is complete.
They’re also required to ensure segregation at all stages of the supply process, such as storage, cutting and polishing, packaging, and transportation. Ideally, suppliers should handle natural and lab-grown stones in separate sites.
De Beers customers must “take steps” to ensure full disclosure and segregation further along the supply chain, down to the consumer.
Clients must have protocols to identify and mitigate contamination risks, and train staff members on the “operational, commercial and reputational impacts” of lab-grown diamonds.
Preferably, companies should disclose the countries in which the synthetic diamond was grown, polished and made into jewelry, as well as the identity of the grower. De Beers says businesses should “strive” to declare this, though it’s not an absolute requirement.
Grading language must contain words that make it clear a stone is lab-grown.
Customers must follow relevant laws, regulations and best practices, such as the standards that the US Federal Trade Commission (FTC) and the ISO have published.

Source: Diamonds.net

De Beers final diamond sale of the year gives some hope to depressed market

Rough uncut diamonds. Image by De Beers.

Anglo American’s De Beers, the world’s No.1 diamond miner by value, said on Wednesday that its last roughs sale of the year fetched $425 million, a slight improvement from the $400 million it obtained in the previous tender, but still over the year a whopping $1.4 billion less than in 2018.

The figure is also 20% lower than the $544 million worth of diamonds the miner sold in December last year, and it has brought the company’s total sales for 2019 to only $4 billion.

DIAMOND GIANT SALES TOTALLED $4 BILLION THIS YEAR, A WHOPPING $1.4 BILLION LESS THAN IN 2018

The diamond giant sells its stones ten times a year in Botswana’s capital, Gaborone. The buyers, or “sightholders,” usually accept the price and the quantities offered, but in the past months they’ve been given more decision making power, with De Beers allowing them to refuse about 50% of the stones contained in the parcels.

The company has also curbed plans to expand diamond production over the next two years and reduced prices for low-quality stones as much as 10%, in yet another sign of increasing volatility at the bottom end of the market.

Cheaper diamonds, which are often small and low quality, have been selling for significantly less now than six years ago due to an unforeseen oversupply that has weighed on prices and producers’ bottom lines.

The situation, some key actors say, is about to change, as the first signs of stabilization in the sector are starting to appear.

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Pressure has been piled on the industry by a supply glut of rough diamonds and competition from lab grown stones, while unrest in Hong Kong and the US-China trade dispute have knocked demand. — *Source Bain & Company.*

“Following continued polished diamond price stability in the lead up to the final sales cycle of the year, we saw further signs of steady demand for rough diamonds during Sight 10,” De Beers chief executive officer, Bruce Cleaver, said in the statement.

His perception is shared by Russian competitor Alrosa (MCX:ALRS), which last week said it had “evidence” that prices for a variety of diamond products edged higher in October and November. The world’s top diamond producer by output also noted that prospects for de-stocking were “more visible.”

Industry consultant Bain & Co., however, believes that while the glut that’s depressing the diamond market will probably be cleared early next year, it will take at least another 12 months for the market to fully recover.

“The industry’s first and strongest opportunity to rebalance and regain growth will be 2021,” said Bain in a report, adding that supply could fall 8% that year.

Source: mining.com

Diamond miners dented by liquidity crisis among India’s polishers

Diamond miners are feeling the pressure after a funding crunch in the world’s polishing hub dented sales of rough gemstones.

Since celebrity jeweller Nirav Modi fled India in 2018 accused of having defrauded a state bank of nearly $2bn, banks have sharply cut back lending to diamantaires, who cut, polish and trade the world’s diamonds.

“Bankers have blacklisted the jewellers industry,” said Shantibhai Patel, president of the Indian Bullion and Jewellers Association in Gujarat, the country’s diamond-cutting centre.

The squeeze has forced diamantaires to buy less from diamond producers such as De Beers, Rio Tinto and Gem Diamonds — which have seen sales and margins suffer as a result.

De Beers is on course to report its worst annual sales in at least four years. In response, the world’s largest producer reduced prices for its rough diamonds by 5 per cent last month at its November sale, the biggest discount in years, Bloomberg reported. De Beers declined to comment on its pricing.

Across the sector, rough diamond prices have fallen 15 per cent since last November, according to Polished Prices. Industry experts say a further 10-15 per cent drop would push some smaller producers to file for bankruptcy.

“It’s a liquidity crisis that’s affecting the middle of the pipeline,” said Edward Sterck, an analyst at BMO Capital Markets. “Diamond manufacturers can’t afford to pay rough diamond prices . . . It’s a function of necessity that prices have come down.”

Diamantaires — 90 per cent of which are based in India — buy rough diamonds from producers such as De Beers that they then cut with lasers and polish for use in jewellery.

The flight of Mr Modi, whose clients included actress Kate Winslet, prompted banks to tighten up lending terms for manufacturers. Bank credit to the diamond industry, of which Indian companies receive about four-fifths, fell 20 per cent to $8bn this year, according to WWW International Diamond Consultants.

As a result, diamond cutters are working through existing stocks rather than buying on the global market. According to India’s Gem and Jewellery Export Promotion Council, imports of rough diamonds into the country fell 22 per cent year over year to $7.3bn between April and October.

This has struck diamond mining companies hard. Stuart Brown, chief executive at Toronto-based Mountain Province Diamonds, said the rough stone market was “challenging” in its third-quarter results.

Mid-sized producers including Canada’s Lucara Diamond and the UK’s Petra Diamonds all reported lower prices for their diamonds in the latest quarter. Lucara reported a selling price of $390 a carat, a 13 per cent drop from last year and a steep fall from 2014, when gems sold for $644 a carat. Dire market conditions drove Quebec-based Stornoway Diamond into bankruptcy in September.

The diamond industry differs from other commodities given the large influence of the two largest producers on pricing, and the fact that diamonds vary in size, quality and colour. De Beers is a “price setter” that offers uncut stones to traders for fixed prices and quantities at sales, known as “sights”.

Production cuts and concessions, including discounts and flexibility to return stones, have provided some relief to De Beers and its customers. Sales rose last month but were still below $400m — the lowest in a November sight on record.

Mr Patel welcomed the Anglo American-owned company’s price cut, but expected little uplift in the foreseeable future. “There’s no work,” he said. “For one year, one and a half years, we’re not expecting any bullish trends.”

But Colin Shah, managing director of manufacturer Kama Schachter, is hopeful that the worst was over for diamantaires. He said that manufacturers were adjusting to the tougher norms in place after the Modi scandal, which could get liquidity flowing again.

“There’s much more [scrutiny] than there used to be,” he said, referring to banks’ lending practices. “Inventories have come down, everyone has made their business models leaner . . . I think the second half of 2020 will be better.”

Industry executives point to tightening supply over the next few years that will help restore diamonds’ key feature: rarity. Rio Tinto’s Argyle mine, which outputs 90 per cent of the world’s valuable pink diamonds, is set to close next year.

Meanwhile, retail demand for diamonds has been robust, particularly in the US where spending on diamond jewellery grew 4.5 per cent to $36bn last year. French luxury group LVMH’s $16.6bn acquisition of Tiffany, agreed last week, was seen by analysts as a vote of confidence in long-term consumer demand for diamond jewellery.

But other industry figures say more drastic action by diamond mining companies is needed to help bedraggled manufacturers. Martin Rapaport, founder of the world’s largest diamond trading platform, said the price cut was insufficient. “It’s not enough to recapitalise the industry,” he said.

“They need to drop prices as much as 50 per cent to return liquidity to the market. It’s too little too late.”

Source: ft.com

Botswana Diamonds digs up first stones at South African mine

Botswana Diamonds said Tuesday that it recovered the first diamonds from plant commissioning activities on its Marsfontein mine in Limpopo, South Africa.

The announcement comes only days after it received a mining permit for diamond-bearing gravels and residual unprocessed stockpiles around the operation.

Chairman John Teeling said the plant was very close to reaching full operations following the installation of an in-field screen, two rotary pans, grease and x-ray recovery system.

“I am delighted with the rapid progress the team has made on-site and it is noteworthy that the first diamonds were recovered within two weeks of the mining permit being granted,” Teeling said.

The Marsfontein mine was operated for two years in the late 1990s, with a payback of its entire development costs in less than four days. The mine’s grade was 172 carats per hundred tonnes, at a bottom cut-off of more than 1.2 mm, containing many fancy coloured diamonds.

The surrounding deposits in question were overlooked when the mine was closed.

Diamond miners are struggling across the board, especially those producing cheaper and smaller stones where there is an over-supply in the market.

Buyers, those that polish and cut diamonds for retailers, have been hit this year by lower prices and tighter credit, prompting them to delay purchases.

De Beers, the world’s top diamond producer by value, has responded by axing production — with a target of 31 million carats this year compared with 35.3 million in 2018.

It has also announced it would spend more on marketing. At the latest sale, the company increased the amount of stones buyers were allowed to reject in each lot purchased from 10% to 20%, according to people familiar with the auction.

Source: mining.com

De Beers Lowers Global Diamond-Jewelry Estimate

De Beers has restated its estimation of global diamond-jewelry sales following a new study valuing the diamond content in jewelry purchases since the 2008 recession. The group also revised its production data to reflect lower output than previously believed, stemming from an overestimation of the artisanal mining sector.

Global diamond jewelry demand rose 2.4% to $76 billion in 2018, driven by growth in the US and China, De Beers said in its annual Diamond Insight Report published last week. However, that figure was below the $82 billion it had originally reported for 2017, as the company gained new insight relating to the elements that are included when valuing jewelry, De Beers explained.

The company revised its estimation for 2009 to 2018 following studies it conducted with retailers relating to the content of diamond-jewelry purchases and the structure of the trade, as well as its “Diamond Acquisition Study” with consumers. The revised figures reflect mainly the value of sales in the US, and are more consistent with the total jewelry retail value stated by the US Commerce Department, De Beers noted. The government agency last year revised down its estimation of US jewelry retail sales.

De Beers maintained its assessment of global polished-diamond demand, which saw a 2% rise to $25.3 billion for 2018, a figure that is included in the jewelry sales total. That suggests there was an overestimation of other elements contributing to the overall jewelry value, such as the value of the metal used, a company representative explained.

De Beers used third-party researchers to obtain information from retailers about their diamond sales, including the description of the diamond, the metal used and the full breakdown of the piece. From that information, the company calculated the price per carat of the diamonds and was therefore able to understand the value of the diamond content and the proportion of the total for which it accounts.

“The study revealed that the share of the polished wholesale value in the overall jewelry retail value had increased in the US after the financial crisis of 2008,” the company noted in the report. “The adjustments made resulted in a new lower diamond-jewelry market estimate for the US and globally.”

Sales in the US grew 5% to $36 billion in 2018, accounting for 49% of the total, according to the research. In China, consumer demand for diamonds rose 3% in local currency and 5% by dollar value to $10 billion, with growth slowing considerably in the second half of the year when the US-China trade war escalated, De Beers noted. Demand also grew in Japan, buoyed by the appreciation of the yen against the dollar, while the market declined in India and the Gulf.

De Beers observed that consumers were increasingly tending toward smaller center diamonds in their engagement-ring purchases, but with more side stones and accents. Other trends influencing demand included a shift toward branded products, with 36% of diamond engagement rings by volume being branded, compared to 22% five years ago. Greater confidence in online buying is also spurring growth, helping chain stores and prestige brands gain market share at the expense of specialist independents, the report stated.

De Beers expects growth to continue in 2019, supported by macroeconomic fundamentals. However, dissipating fiscal stimulus and rising recession fears could prove to be a drag on growth in the US in 2020, the company cautioned.

Production levels down

Meanwhile, global diamond production in 2018 fell 2.7% to 154 million carats, with its value up an estimated 2.4% to $17.4 billion in 2018, according to De Beers. In last year’s Insight Report, the company said 2017 output stood at 164 million carats valued at $17.5 billion. De Beers lowered its estimation of global rough production after it commissioned a third-party study of the artisanal mining sector.

“The nature of the informal sector is such that there is less information available to accurately estimate production to a high level of confidence,” a spokesperson explained in an email. “The report concluded that our previous estimates of informal production were likely too high, particularly in the Democratic Republic of the Congo.”

The report outlined growth in global diamond production, rough sales, polished wholesale demand and diamond-jewelry sales, as presented in the following table:

Data from 2019 De Beers Insight report, with Rapaport estimates for percentage growth where it wasn’t provided.

Source: diamonds.net

More Brides Buying Their Own Engagement Rings

US women increasingly buy engagement rings for themselves, and spend more on them than their partners do, De Beers said Monday in its annual Diamond Insight Report.

The proportion of engagement rings financed solely by brides rose to 14% in 2017 from 11% in 2015 and 7% in 2013, according to the report. The trend reflects growth in female purchasing power, one of several social changes impacting the segment De Beers refers to as “commitment jewelry.”

During the four years ending 2017, grooms’ average outlay on engagement rings dropped 13%, while brides’ spending rose 19%, De Beers noted. In 2017, brides who reported buying the ring themselves shelled out an average of $4,400, while grooms spent $3,300, the company said.

“This emphasizes that growing purchasing power among women is a factor to be reckoned with in the commitment space, and not only when it comes to self-purchasing of diamond jewelry,” the company noted.

The 2019 Insight Report focuses on how consumers view love and diamonds amid changing attitudes to relationships. While marriages rates have declined in the US and engaged couples are waiting longer to tie the knot, “love remains a constant,” and consumers are buying diamonds in a wider variety of ways to symbolize it, De Beers explained.

Commitment jewelry — diamond engagement rings, and diamond wedding bands or rings for women — has retained its important place in the market, with just over 70% of US brides acquiring a diamond engagement ring.

However, the global value of men’s gifts of diamond jewelry to women before or after a wedding now exceeds the value of the engagement- and wedding-ring market. Women in the US who cohabit with their partners now account for 10% of the female diamond-jewelry market. Meanwhile, more than 70% of people in same-sex relationships view diamonds as important for celebrating life’s special events, the report continued.

Those four trends — commitment jewelry, “love gifting,” cohabitation and same-sex couples — are the focus of this year’s edition of the De Beers research. Consumers are still attracted to diamonds as an emblem of love, but are approaching the product in new ways that mirror those contemporary modes of living, the company argued.

“While diamonds are still seen as the ultimate symbols of love, the diamond industry must focus on continuing to offer jewelry, brands and retail experiences that meet the modern consumer’s desire for individual products and experiences that reflect their own unique love story,” said De Beers CEO Bruce Cleaver.

Source: Diamonds.net

De Beers banks on ‘diamonds are for me’

Anglo American unit De Beers said its 2019 marketing budget will exceed last year’s figure of $170 million and will focus on the biggest market the United States, where women lavishing diamonds on themselves has boosted sales.

While U.S. demand has held firm, the diamond market has weakened elsewhere and trade tensions and protests in Hong Kong have dented sales in China, the second largest diamond market.

But luxury groups see potential for growth in jewelry demand, as shown by LVMH’s nearly $14.5 billion offer, made public on Monday, to buy Tiffany & Co.

Esther Oberbeck, group head of strategy at De Beers, the world’s biggest diamond producer by value, said in an interview the company was about to launch new marketing campaigns, focused on the U.S. and China.

She did not specify the budget, but said De Beers’ 2019 spend would exceed last year’s $170 million and was the highest in more than a decade.

The campaigns, which she said would concentrate on “self-purchase and the bridal market”, are based on research carried out for De Beers, published on Monday.

It found the share of U.S. women buying their own engagement ring doubled from 7% to 14% over the five-year period 2013-2017 and that women on average spent a third more than men – $4,400 compared with $3,300.

De Beers sells rough diamonds and jewelry through its Forevermark brand.

Its research anticipates the rough diamond market will recover from a period of oversupply as some mines reach their end of their lives, notably Rio Tinto’s Argyle mine in Australia.

Global consumer demand for diamonds rose by 2% in 2018 to $76 billion and, in dollar terms, China and the United States were the fastest-growing regions, both increasing by 5% year on year, it said.

Demand for diamond jewelry in the U.S. rose by 5% to $36 billion, representing just under half of total global diamond jewelry demand, underpinned by “solid macro-economic factors”, the De Beers research found.

Diamonds are still the leading choice for engagement rings, whether between same sex or heterosexual couples.

But demand for diamond jewelry as a gift to mark all kinds of special occasions, including rewards to oneself, now outweighs demand directly related to weddings, De Beers said.

Source: Reuters

De Beers Slashes Output Amid Diamond Glut

De Beers’ production dropped in the third quarter as the miner responded to a decline in rough demand that has left it with an inflated stockpile of diamonds.

Output fell 14% to 7.4 million carats for the period amid planned mine closures and the transition from open-pit to underground mining at its Venetia project in South Africa, parent company Anglo American said Tuesday.

“We continue to produce to weaker market demand due to macroeconomic uncertainty as well as continued midstream weakness,” the miner noted. “Diamond inventory has continued to build during the third quarter due to the subdued market conditions. The elevated inventory levels are not expected to unwind until 2020.”

De Beers reduced production across all the countries in which it operates except Botswana, the miner said. In De Beers’ South African operations, production fell 60% to 535,000 carats due to the lower volumes at Venetia. Production also ceased at the Voorspoed project in the Free State province at the end of last year.

Output shrank 7% to 426,000 carats in Namibia following the shutdown of De Beers’ Elizabeth Bay land operations in September 2018. However, production remained flat in Botswana, at 5.7 million carats, with a 22% planned increase at its Orapa project offset by an 18% decrease at the Jwaneng mine.

In Canada, production dropped 34% to 779,000 carats, largely due to the closure of De Beers’ Victor operation in Ontario, which reached the end of its life earlier this year.

Sales volume jumped 48% year on year to 7.4 million carats, as the company held one more sight than during the same period a year ago. However, overall rough demand remained subdued, the miner explained.

In the first nine months of 2019, the miner produced 23 million carats, down 12% year on year. Its rough-diamond sales remained flat during the period.

Source: Diamonds.net

Synova Launches Automated Diamond Cutter

A technology provider part-owned by De Beers has unveiled an automated cutting machine that, it claims, will significantly speed up diamond manufacturing and reduce costs.

Synova’s DaVinci system is the market’s first automated instrument that can produce all 57 facets of a round brilliant diamond in one process, the Swiss company said Thursday. The user only needs to perform one final polishing stage to finish the stone.

“Several cost, skill and labor intensive steps in the polishing phase, such as crown and pavilion blocking, girdle bruting or recurrent quality checks, become redundant,” noted Bernold Richerzhagen, Synova’s founder and CEO.

The machine, currently intended for rough stones from 0.50 to 10 carats, gives manufacturers increased flexibility to adapt their production levels to business needs, such as seasonal demand, Synova explained.

It also gives better symmetry and a higher and more predictable polished yield, and uses water jet technology to reduce the risk of diamond cracking, the company asserted. It’s based on its existing DCS 50 cutting machine.

De Beers bought a 33% stake in Synova in 2015, pledging to work with the company to develop a fully automated cutting and shaping solution. The miner has made diamonds available for some of the machine testing.

Source: Diamonds.net