One of the world’s largest yellow diamonds weighing 205.7 ct and known as the Red Cross Diamond is to be auctioned by Christie’s London.
The fancy intense yellow, cushion-shaped stone has a pavilion distinctively faceted in the shape of a Maltese cross.
The original rough gem was recovered by De Beers, in South Africa, in 1901 and was sold in 1918 in aid of the British Red Cross Society and the Order of St John.
It raised $13,000 equivalent to $780,000 in today’s money when it was sold at Christie’s London to the famous London firm S.J. Phillips.
It was sold again in November 1973, achieving CHF 1.8 million at Christie’s Geneva and returned to private ownership.
The diamond will again be offered for sale at Christie’s London on 11 May, with an undisclosed part of the sale revenue to be donated to the International Committee of the Red Cross.
We have asked Christie’s for the estimate, which is available “on request”.
De Beers is bringing its sales activities back to Botswana’s capital Gaborone, it said on Thursday, almost two years after the Covid-19 pandemic forced them to be held in cities including Antwerp and Dubai.
The Anglo American subsidiary had moved its pre-sale viewings – a marketing exercise to showcase its new batch of diamonds – from Botswana in May 2020 when travel restrictions to curb the pandemic prevented its international customers from flying to the Southern African country.
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Customers from across the world fly ten times a year to participate in week-long diamond sales, known as sights, in Botswana, which accounts for 90% of the company’s total annual sales.
“From March, we are bringing back the sights to Gaborone and we look forward to meeting again as an industry after a long time,” De Beers Executive Vice-President Diamond Trading Paul Rowley told a press briefing.
“We will of course maintain some flexibility for some customers who will still not be able to come to Botswana.”
The return is expected to bring in valuable foreign exchange to Botswana, which had lost out additional earnings from travel, hospitality and ancillary services, even though sales income still came to the country.
The majority of diamond mining in the country is done by Debswana, a company jointly held by De Beers and the Botswana government, which sells 75% of the diamonds mined to De Beers. The remaining 25% of the diamonds is sold to state-owned Okavango Diamond Company.
Apart from the large business delegations who visit the country ten times a year, the pre-sale viewings are known to attract more than 100 high net worth diamond magnates who spend heavily in the country.
De Beers, the world’s top diamond producer by value, saw sales jump by 18% in the second cycle of 2022 compared to the same period last year, attesting to the industry’s consolidated recovery from the first pandemic-induced shutdowns.
The Anglo American unit sold $650 million of diamonds between February 21 to February 25, down $10 million from the first cycle of the year, but higher than the $550 million it sold in the second cycle of 2021.
De Beers sells its gems through 10 sales each year in Botswana’s capital, Gaborone, and the handpicked buyers known as sightholders generally must accept the price and the quantities offered.
Customers are given a black and yellow box containing plastic bags filled with stones, with the number of boxes and quality of diamonds depending on what the buyer and De Beers agreed to in an annual allocation.
The company said that owing to the restrictions on the movement of people and products in various jurisdictions around the globe, it has continued to implement a “more flexible approach” to selling roughs, which included extending the latest sight event beyond its normal week-long duration.
The miner, which has benefitted from a steady recovery in the diamond market, is said to have hiked prices by about 8% in January. It had already increased the price of its rough diamonds throughout much of 2021 as it sought to recover from the first year of the pandemic when the industry came to a near halt. Most of these hikes, however, were applied to stones bigger than 1 carat.
The strategy granted De Beers a steady recovery during 2021. Its diamond prices rose by 23% in “just over a year,” said Mark Cutifani, CEO of Anglo American in a December presentation.
Russia-Ukraine effect De Beers may benefit from the sanctions imposed to Russian companies as Moscow-based Alrosa (MCX: ALRS), the world’s top diamond miner by output, is its main competitor.
Alrosa and its chief executive Sergei S. Ivanov were included in the first wave of restrictions announced by the US Department of the Treasury’s Office of Foreign Assets Control (OFAC), which targeted mainly banks and energy firms.
Data from the US Treasury shows Alrosa is responsible for 90% of Russia’s diamond production and 28% of global supply.
De Beers chief executive Bruce Cleaver said the company has been “shocked” and “saddened” by the war in Ukraine, so it will donate $1 million to aid organizations operating in the region and providing support to those affected by the ongoing conflict.
Experts believe that The Kremlin will soon be unable to pay its debts amid increasing international sanctions against Russia.
Credit ratings agency Fitch Ratings has downgraded its view of the country’s government debt, warning a default is “imminent” for the second time this month.
“The further ratcheting up of sanctions, and proposals that could limit trade in energy, increase the probability of a policy response by Russia that includes at least selective non-payment of its sovereign debt obligations,” the agency said.
Moscow has told investors that it will continue to service its sovereign debt but warned that international sanctions imposed on its energy industry could limit its ability and willingness to meet its obligations.
Sorting a parcel of rough diamonds Gaborone, Botswana.
De Beers lifted prices of smaller rough at this week’s sight, its second consecutive increase, as the industry continued to express concerns about a perceived mismatch with polished.
Goods weighing less than 0.75 carats saw price hikes of around 5% at the February sale, while larger items were mostly stable, sightholders and industry insiders told Rapaport News this week.
The latest adjustments follow a strong US holiday season for retail and come amid robust demand in the polished sector while the industry restocks. Rough prices have rocketed in recent months, reflecting this appetite as well as supply shortages.
Prices at auctions and tenders have risen even more strongly than sight goods, with traders enjoying unprecedented premiums when reselling De Beers boxes on the secondary market.
However, manufacturers’ margins have suffered. This was a major point of discussion at the Dubai Diamond Conference, which took place Monday.
“There is still some buzz, but people are very cautious now because they’ve understood that prices have hit the ceiling and [De Beers] is facing resistance now with the new prices,” a sightholder said Tuesday on condition of anonymity. “There will be some stability and there has to be some mindfulness, because rough prices are outpacing polished prices so anyone who buys rough at those prices is not going to make a profit.”
The increases at the February sight followed sharper hikes in January, when rates jumped by up to 15% in the smallest categories and by 5% to 12% in larger sizes.
“What we try and do very hard at De Beers is price properly in accordance with demand,” De Beers CEO Bruce Cleaver told Rapaport News on the sidelines of the Dubai event. This is based on expectations of how the final polished will sell when it becomes available two or three months later, he explained. “Our crystal ball is no better than anyone else’s, but it’s based on a lot of data at the time that we make these pricing decisions.”
China Sales ‘Average’
Meanwhile, sales in the Far East during the recent Chinese New Year were steady, producing figures broadly in line with last year, dealers reported. This came despite headwinds in the latter months of 2021, including fresh Covid-19 outbreaks, a real-estate crisis, and power shortages.
The unfavorable comparison with last year’s season of post-lockdown recovery also affected the numbers, while fewer consumers took trips within China — usually a driver of seasonal demand, Cleaver pointed out.
“There’s no question that people are not traveling as much between the big Chinese cities and coming into the big Chinese cities to buy as they might have been because of [Covid-19],” he noted, cautioning that the information was preliminary. “In a sense, it could have been a bit better, but the early data I’ve seen is that it’s been an average to reasonable New Year.”
However, store openings in the mainland’s tier 3 and 4 cities are progressing well, he said.
“I don’t think there’s any reason to think that will slow down, and our clients tell us that’s continuing to happen,” the executive added.
The February sight, the second sale of the year, began on Monday and ends Friday.
Sales of rough diamonds by Debswana Diamond Company jumped 73% in the first nine months of 2021, statistics released by the Bank of Botswana showed on Tuesday, driven by the reopening of U.S. and China’s consumer markets.
Debswana, a joint venture between Anglo American business De Beers and the Botswana government, sells 75% of its output to De Beers, with the balance taken up by state-owned Okavango Diamond Company.
Debswana sales fell by 30% in 2020 as the covid-19 pandemic hit demand while global travel restrictions hurt trading.
Botswana closed its borders for eight months last year in an effort to curb the spread of the virus, effectively locking out foreign buyers from centres such as Mumbai, Antwerp and China, who traditionally travel to Gaborone 10 times a year to view and buy diamonds from De Beers.
Since mid-2020 De Beers has shifted some of its rough viewings to places closer to international diamond centres, such as Antwerp, to cater for customers unable to travel to Gaborone.
According to data published by the central bank, exports of diamonds from Debswana stood at $2.589 billion in the first nine months of the year compared with $1.498 billion in the same period last year.
Botswana makes about 30% of its revenue and 70% of its foreign exchange earnings from diamonds. While it has taken measures to diversify its dependence on a single commodity, diamond sales continue to be its main revenue earner.
De Beers’ sales softened by 4% in the current sales period, which ended last week, as Indian manufacturers closed factories ahead of the Diwali festival, though the company said diamond jewellery demand remained strong in the United States.
De Beers has begun investigating Greenland’s potential as a source of high-value marine diamonds.
The miner commissioned a government agency to carry out a survey into diamond deposits, which are “known to be present” near the coast in the west of the Arctic island, according to an environmental assessment report by De Beers.
The Geological Survey of Denmark and Greenland (GEUS) — part of the Danish Ministry of Climate, Energy and Utilities — carried out the eight-day research in late September. GEUS set up and ran the survey, with De Beers requesting to extend it and participate in it, a spokesperson for the miner told Rapaport News Wednesday.
The purpose of the “small-scale, early-stage research” was to understand the region’s topography, he added, noting that it was unclear whether the location lent itself to concentrated sediments.
“De Beers Marine (DBM) would like to determine whether the offshore environment is conducive to the formation of secondary diamond deposits,” the environmental report said. “In order to do this, high-resolution geophysical data is required.”
Marine diamonds are generally of high quality, because only the best stones survive the impact of being washed around by water. De Beers currently mines marine diamonds off the coast of Namibia; the country’s 2020 rough production had a value of $465 per carat, one of the highest in the world, according to Kimberley Process data. The company is not carrying out similar surveys anywhere else, the spokesperson confirmed.
De Beers also operates land-based mining in Botswana, South Africa and Canada.
De Beers’ rough prices spiked in the first half of 2021 as supply shortages coincided with buoyant diamond demand at the trade and retail levels.
The miner’s price index rose 14% during the six months, reflecting “tightness in inventories across the diamond value chain, as well as positive consumer demand for polished diamonds,” parent company Anglo American said Tuesday.
De Beers implemented price increases at its January, February and June sights, with an emphasis on the larger categories of rough. This brought prices back to pre-pandemic levels: The index for the first half was flat versus the same period of 2020, the company reported.
Sales volume at De Beers rose to 7.3 million carats in the second quarter from just 300,000 carats a year earlier during the peak of the coronavirus crisis. The average sales price advanced 13% to $135 per carat as demand shifted to higher-value rough.
“Consumer demand for polished diamonds continued to recover, leading to strong demand for rough diamonds from midstream cutting and polishing centers, despite the impact on capacity from the severe Covid-19 wave in India during April and May,” the miner said.
Meanwhile, production more than doubled to 8.2 million carats for the quarter versus 3.5 million carats last year, reflecting planned increases to meet the stronger rough demand, as well as the sharp impact of lockdowns in southern Africa in 2020.
With half of 2021 now over, De Beers was able to give a more specific production outlook for the full year, predicting output of 32 million to 33 million carats — compared with a previous plan of 32 million to 34 million carats. The company has already reduced its guidance for the year twice because of operational issues at mines.
“Most of the impact on production for the year as a whole is a result of the challenges we experienced earlier in the year, particularly with excessive rainfall in southern Africa, the Covid-19-related shutdown in Canada, and power supply disruptions in Botswana,” a De Beers spokesperson commented. “We still expect production in the second half of the year to be significantly above the 15.4 million carats produced in the first half of the year, however, and this will take us to the narrower guided range.”
In the second quarter, output in Botswana more than tripled to 5.7 million carats from 1.8 million carats a year before. Production in Namibia slipped 6% to 338,000 carats, as one of the company’s mining vessels underwent planned maintenance and another remained demobilized.
Output in South Africa more than doubled to 1.3 million carats from 555,000 because the company processed higher-grade ore at the Venetia mine. Canada’s production climbed 14% to 899,000 carats, mainly reflecting the comparison with last year’s slowdown.
The diamond firm Debswana has announced the discovery in Botswana of a 1,098-carat stone that it described as the third largest of its kind in the world.
The company’s acting managing director, Lynette Armstrong, presented the stone, which was found on 1 June, to the country’s president, Mokgweetsi Masisi, on Wednesday.
It is the third largest in the world, behind the 3,106-carat Cullinan found in South Africa in 1905 and the 1,109-carat Lesedi La Rona discovered in Botswana in 2015.
“This is the largest diamond to be recovered by Debswana in its history of over 50 years in operation,” Armstrong said.
“From our preliminary analysis it could be the world’s third largest gem-quality stone. We are yet to make a decision on whether to sell it through the De Beers channel or through the state owned Okavango Diamond Company.”
The “rare and extraordinary stone … means so much in the context of diamonds and Botswana,” she said. “It brings hope to a nation that is struggling.”
The minerals minister, Lefoko Moagi, said the discovery of the stone, which is yet to be named but measures 73 by 52 by 27mm, could not have come at a better time after the Covid-19 pandemic hit diamond sales in 2020.
Debswana is a joint venture between Anglo American’s De Beers and the Botswanan government, which receives as much as 80% of the income from sales through dividends, royalties and taxes.
Production at Debswana fell by 29% in 2020 to 16.6m carats and sales fell by 30% to $2.1bn as the pandemic affected production and demand.
Debswana plans to increase output by as much as 38% to pre-pandemic levels of 23m carats in 2021 as the global diamond market recovers with the easing of travel restrictions and reopening of jewellers.
De Beers increased prices of goods above 2 carats at this week’s sight as shortages of rough coincided with strong polished demand.
Prices rose around 5%, and more in some categories, market insiders told Rapaport News on Monday. Near-gem items also saw significant increases, while prices for other stones under 2 carats were either stable or slightly up.
“They seem to have picked areas where they’ve seen room [for price growth], and they’ve just hiked the prices up,” a source in the rough sector said on condition of anonymity. “For the time being, the market is absorbing it.”
Rough trading has been strong in recent weeks because of reduced supply from the large miners and solid polished sales. The RapNet Diamond Index (RAPI™) for 1-carat diamonds has risen 2.5% since May 1.
Rough above 1 carat has been especially sought-after, with premiums on the secondary market rising while manufacturers look to fill inventory gaps. A backlog of grading submissions at the Gemological Institute of America (GIA) has exacerbated the situation.
The June sight value will be similar to last month’s $380 million as customers snap up the limited goods available at the sale, sources said. Proceeds were higher earlier in the year — peaking at $663 million in January — when manufacturers restocked after the holidays and De Beers had larger volumes available to sell.
“There’s a shortfall in goods,” an executive at an Indian sightholder said Monday. “They’re not able to serve everyone what they’re entitled to.”
Rough demand slumped during the 2020 coronavirus crisis as the global supply chain froze. De Beers chose to maintain prices until August, when it offered deep discounts to encourage sightholders to resume buying. It has since reversed those cuts, gradually bringing prices to above pre-pandemic levels in many categories.
The sight began on Monday and runs until Friday. De Beers was not available for comment at press time.
Rough-diamond demand was robust at this week’s De Beers sight despite the ongoing Covid-19 crisis in India, customers reported.
Manufacturers snapped up the limited supply in anticipation of rough shortages, sources told Rapaport News. Sales will still be 10% to 25% lower than the previous cycle in March because of reduced availability, they estimated. That translates to a sight value of $330 million to $400 million.
“People are buying from the miners and the big sources, thinking that there will probably be tenders that will be canceled,” a sightholder said. “There is the perceived idea that there’s going to be a shortage in certain goods. People are as eager to buy rough as they were four weeks ago.”
De Beers is not offering any ex-plan goods — those over and above customers’ prearranged allocations — the sources added. The miner has fewer diamonds available for clients after reducing its inventories during a strong first quarter for the rough trade, when it sold 13.5 million carats against production of 7.2 million carats. It has suffered operational difficulties at some of its Botswana deposits, exacerbated by a temporary shutdown at its Gahcho Kué mine in Canada.
“If De Beers offered 20% more [goods at the sight], I think the market would eat it up,” a rough-sector insider commented.
Less manufacturing
While India’s diamond and jewelry sector has received permission to operate during the country’s several coronavirus wave, manufacturing levels have slumped by between 10% and 50% in the past month. This has resulted from capacity restrictions and absenteeism, with smaller sizes seeing a sharper downturn.
Companies that manufacture larger goods operate in factories with more space for social distancing and are able to retain workers by offering higher pay, a sightholder explained. Many employees who produce smaller stones have left Surat and returned to their hometowns for health reasons.
“My production is down by a little less than 10%, but for people who are in smalls, their production has been severely hit, and is probably down by more than 30%,” said an executive at a large-stone manufacturer.
In line with this, the market for large rough has survived better than the small-stone segment, sources explained.
“Anything in [0.75 carats] or up, it’s in big demand,” a customer noted. “You can sell whatever you want.”
Meanwhile, polished demand has strengthened as companies anticipate lower availability alongside steady retail sales. A backlog at the Gemological Institute of America (GIA) has also affected the supply situation, with the turnaround time standing at around a month for the Mumbai laboratory and a little more in Surat.
“Due to the supply scarcity, people are stocking [up on] some of the goods, so demand is high, and will remain strong for a month or so,” another manufacturer said.
India’s virus outbreak has seen activity shift to other global centers. Many large manufacturers relocated their buying teams to Dubai before travel restrictions went into effect, enabling them to continue obtaining rough for their factories, reported Trans Atlantic Gem Sales (TAGS), a tender house located in the emirate.
New contract
De Beers’ weeklong May sight, its fourth of the year, began on Monday, featuring viewings in Dubai, Antwerp and Tel Aviv. The session is also the first under a new supply contract that came into effect on April 1.
The agreement sees the miner offer proportionately more goods to manufacturers rather than dealers in an effort to limit the reselling of boxes. Sightholders expected sluggish rough trading on the secondary market this month as a result.
Certain assortments have also changed, with 8-grainer (2-carat) rough now forming part of a category of larger stones ranging from 2 carats upward, sightholders noted. The size was previously in a 4- to 8-grainer (1- to 2-carat) box, which will now become 4- to 6-grainers (1 to 1.50 carats).
“This was focused both on responding to sightholders’ commercial needs and ensuring we have the most coherent offering for beneficiation customers,” a De Beers spokesperson said.
Customers forecast stable pricing at the sight following successive increases from December to February.
