De Beers has reduced its production plan for the next two years, aiming to avoid releasing too much rough into the market as the diamond sector attempts to exit the crisis that dominated 2020.
The miner expects to unearth 33 million to 35 million carats in 2021, down from its previous forecast of 34 million to 36 million carats, parent company Anglo American said Friday in a presentation to investors. Output in 2022 will range from 30 million to 33 million carats — compared with earlier guidance of 33 million to 35 million carats — and will remain at the same level in 2023.
De Beers will produce around 26 million carats this year, after the pandemic prompted management to rethink the previous outlook of 32 million to 34 million carats.
“There’s an appropriate degree of prudence being exercised in what we’re forecasting going forward, and we certainly aren’t going to be a contributor to overstocking across the industry now,” said Anglo American CEO Mark Cutifani. “Given the supply situation, we’re going to watch that very carefully. We won’t push more production out there unless we’re comfortable prices are going to increase.”
The adjusted figures came despite De Beers’ expectations of limited global supply, with around 30 million carats dropping out of the pipeline as a result of Covid-19 and the closure of the Argyle mine, he estimated. At least two-thirds of that is unlikely to come back into the market, the executive pointed out. Meanwhile, Cutifani noted signs of a recovery in demand after a difficult year for the industry.
“[It’s] a bit early to call how the Thanksgiving [to] New Year selling season will go, but so far [it’s] quite encouraging despite the obvious Covid issues in the US,” he explained. “China’s been very strong. So far, things are going pretty well.”
However, caution is necessary following a string of major internal and external events that have derailed the diamond market in recent years. Those include a credit crisis in the Indian market in 2018, as well as the US government shutdown that occurred in late 2018 and early 2019, the CEO warned.
Separately, De Beers has made an advance purchase of rough from Debswana, its joint venture with the Botswana government, providing the company with inventory to sell in the first quarter if the demand recovery continues. It also received a one-year extension to negotiations with the African country over their sales deal, after the pandemic prevented the parties from reaching an agreement this year. The 10-year arrangement was due to expire on December 31, 2020.
A Cartier emerald and diamond ring blew past five fancy colored diamonds to become the top lot at Sotheby’s New York Magnificent Jewels auction held Wednesday. It fetched $3.6 million, more than three-and-a-half times its high estimate.
The ring features a 21.86-carat Colombian square-emerald-cut emerald flanked by diamonds and mounted on 18k yellow gold. The emerald is described in the grading report as having “minor clarity enhancement” and a “richly saturated medium deep slightly bluish green, slightly included with a few surface reaching inclusions, and the girdle bearing a chip and a few nicks, noticeable under 10x magnification.”
The ring was from the collection of Cecile Zilkha, best known for her lifelong interest in the arts, particularly The Metropolitan Opera.
Private collections featuring a variety of signed jewels were an important part of this sale, with many items from these collections far exceeding estimates. All 29 jewels from the Cecile Zilkha collection sold, fetching a total of $11.7 million, nearly double the estimate for the collection. Eleven jewels from the collection of Marylou Whitney, the philanthropist, thoroughbred breeder, arts patron and society hostess, all sold fetching a total of $1.7 million.
The sale overall was quite successful, taking in a total of $46.9 million, the highest total for a Sotheby’s jewelry auction since 2017. In addition, 91% of the lots sold, with 74% of the lots fetching prices above their high estimates and nine pieces surpassing $1 million.
1.71-carat heart-shaped fancy red diamond with SI2 clarity fetched more than $3.1 million SOTHEBY’S
Fancy colored diamonds, including three heart-shaped gems, made up the top five lots prior to the sale. However two of the gems failed to meet the reserve price. The first was the anticipated top lot of the sale, a pink gold and platinum ring set with a 5.03-carat cut-cornered rectangular mixed-cut fancy vivid pink diamond, accented with two cut-cornered triangular step-cut fancy intense blue diamonds. Its estimate was $9 million – $12 million.
The second was a ring centered with a 2.28-carat fancy vivid blue heart-shaped diamond, encircled by round yellow and framed by white diamonds with an estimate of $2.25 million – $3.25 million.
The three remaining fancy colored diamond lots sold within estimates and were the next three top lots of the sale. They are:
* A 1.71-carat heart-shaped fancy red diamond with SI2 clarity surrounded by white diamonds and mounted on an 18k white and pink gold pendant for a necklace. It fetched more than $3.1 million.
3.67-carat fancy intense blue diamond fetched more than $3.1 million SOTHEBY’S
* A 3.67-carat fancy intense blue diamond in a cut-cornered rectangular modified brilliant-cut diamond. The stone is flanked by two emerald-cut diamonds and mounted on an 18k white gold ring. It fetched more than $2.6 million.
A 2-carat fancy vivid orange diamond fetched nearly $1.9 million SOTHEBY’S
* An 18k white and pink gold ring centered with a 2-carat fancy vivid orange diamond framed and accented by round diamonds that fetched nearly $1.9 million.
As mentioned, private collections were an important part of this sale. In addition to the Cartier emerald ring, the Cecile Zilkha collection comprised of 28 other signed and historic jewels. Among the standouts:
Emerald and diamond earclips by Bulgari fetched more than $1.1 million SOTHEBY’S
* Emerald and diamond earclips by Bulgari that fetched more than $1.1 million, double its high estimate;
* A 1930s diamond rivière by Bulgari that fetched $806,500, well above its high estimate;
* A silver-topped gold, sapphire and diamond brooch that fetched $625,000, more than double its high estimate;
* Earclips by Harry Winston featuring two cut-cornered square modified brilliant-cut Fancy Intense yellow diamonds weighing 15.24 and 14.22 carats that fetched $528,200, within estimates; and
* A ruby and diamond bracelet by Harry Winston that fetched $441,000, well above the high estimate.
A Cartier natural pearl necklace from the collection of Marylou Whitney fetched more than $1.6 … [+] SOTHEBY’S
The sale ended with 11 jewels from the collection of Marylou Whitney. The top lot in this collection was a Cartier necklace composed of 32 rare natural pearls with a diamond clasp. It fetched more than $1.6 million, more than three times its high estimate.
Emerald, ruby, sapphire and diamond Mughal-inspired necklace by David Webb sold for $327,600 SOTHEBY’S
In addition, two David Webb pieces from the Whitney collection performed extremely well. The first was a platinum bracelet set with 10 emerald-cut diamonds weighing 21.16 carats. It fetched $352,800, above estimates. The second was a showstopper Mughal-inspired necklace that boldly displays a 181.95-carat translucent carved emerald and 10 cabochon emeralds that weigh a total of 126.30 carats, along with rubies and diamonds. The necklace sold for $327,600, more than triple its high estimate.
Van Cleef & Arpels mystery-set sapphire and diamond flower brooch fetched $1.1 million SOTHEBY’S
While Cartier, Bulgari and Harry Winston dominated the headline sales, jewels from Van Cleef & Arpels may have had the biggest impact overall. Twenty-eight jewels by the Parisian luxury brand were sold at the auction. The top lot from Van Cleef & Arpels was a mystery-set sapphire and diamond brooch designed as a flower from a New York collector that sold for more than $1.1 million, nine times its high estimate. That was certainly a headline sale.
An indication that private collections and signed jewels were going to dominate came at the very beginning of the sale. The first 10 lots from a private family collection were by Van Cleef & Arpels. They all sold well above their estimates.
Other auction highlights included:
Jadeite, natural pearl and diamond necklace by Raymond Yard, circa 1935, fetched $1.6 million SOTHEBY’S
* A jadeite, natural pearl and diamond necklace by Raymond Yard, circa 1935, sold for $1.6 million after competition from three phone bidders, more than four times its high estimate. The piece was offered from the estate of Mary Lily Kenan Flagler.
Cartier sapphire and diamond bracelet in a fan design, circa 1960s, fetched $1 million SOTHEBY’S
* A Cartier sapphire and diamond bracelet in a fan design, circa 1960s, that fetched just over $1 million, just topping its high estimate.
A ring set with a 1.08-carat pear-shaped fancy vivid blue diamond sold for $927,500 SOTHEBY’S
* A ring set with a 1.08-carat pear-shaped fancy vivid blue diamond accented by round diamonds sold for $927,500, above estimates. The piece was offered by a Texan collector.
Botswana Diamonds (LON:BOD) said on Monday it had completed the acquisition of Sekaka, the exploration vehicle that belonged to embattled rival Petra Diamonds (LON:PDL) and which held three prospecting licenses in the country’s Central Kalahari Game Reserve.
In one of its licenses, Sekaka had singled out the KX36 kimberlite pipe, which is situated about 70 km from Gem Diamonds’ Ghaghoo mine, and 260 km north-west of Botswana’s capital Gaborone.
SIGN UP FOR THE PRECIOUS METALS DIGEST Sekaka also had a recently built, fit-for-purpose bulk sampling plant on-site that includes crushing, scrubbing, dense media separation circuits and X-ray recovery modules within a secured area.
The acquisition includes an extensive database, built up over 15 years of exploration.
Botswana Diamonds believes the information contained in the database will provide substantial support to its future kimberlite exploration activities in the mining-dependent country, the world’s second-largest diamond producer.
“We are delighted that this acquisition has now closed. This paves the way to explore commercial development options for KX36 and begin to evaluate the extensive database in conjunction with ours to discover more kimberlites in prime diamond real estate,” chairperson John Teeling said in a media statement.
Diamond exports from the southern African nation dropped 42% to $1.49 billion in the first nine months of this year as production fell 29% to 12.3 million carats due to covid-related restrictions.
Botswana’s mining sector provides a fifth of the country’s GDP and 80% of its foreign exchange earnings.
Mounting woes Petra Diamonds, the former owner of Sekaka, has been struggling for over two years. Its weak financial position pushed it to shed non-core assets and put itself up for sale in June.
The company reversed the decision in October, opting instead for a debt-for-equity restructuring. The deal would leave existing shareholders with just 9% of the company.
Petra is also dealing with allegations of human rights abuses at its Williamson mine in Tanzania, resulting from the actions of its security guards.
It recently reported a 36% fall in revenue and a net loss of $223 million (168.7 million pounds) for the year ended June 30, as the coronavirus pandemic deepened the company’s financial woes.
Swiss technology provider Synova has expanded its automated diamond-cutting system to include fancy shapes, it said Monday.
The company, which is part-owned by De Beers, unveiled the DaVinci Diamond Factory last year at the Dubai Diamond Conference. Synova claims the machine will significantly speed up diamond manufacturing from weeks to hours, improve accuracy and symmetry, and reduce costs. However, the version it initially launched could only cut round-brilliant diamonds with up to 57 facets.
“The pandemic restrictions had us more or less blocked from selling in the first half, so instead of sitting here and doing nothing, we developed the machine and made it market-ready,” Joerg Pausch, head of the diamond business at Synova, told Rapaport News. “We developed software add-ons that will allow for cutting of automated fancy shapes. After the first announcement, people were calling us asking if it can do fancy shapes, and that has actually become our strongest request from the market.”
Synova’s initial testing of the automated fancy shapes has shown “very promising results,” it noted. The technology provider will release the new software early next year.
The company has already received a number of orders for the DaVinci from Europe, South Africa and North America, Pausch noted. It also intends to develop the machines to include more automation, he added.
The diamond sector’s rebound from the Covid-19 crisis will feature ups and downs that will continue into next year at least, De Beers predicted.
“The demand recovery is not expected to be linear, particularly as localized lockdowns take place,” De Beers explained Monday in its annual Diamond Insight Report. “Retailer expectations for the second half of the year are mixed, with more optimism in the US but muted sentiments in India and the Far East.”
The pandemic severely hit Chinese demand in the first quarter of this year and US sales in the second quarter, with the recovery likely to “extend well beyond 2020,” the company noted. The impact of Covid-19 on the global economy and the second wave of lockdowns in the fourth quarter have further harmed consumer spending, it added.
“The consequences of these events will determine the short to medium-term outlook,” De Beers added. “However, a weakening US dollar could offset some of the softness in demand in local currencies.”
The pandemic dented the positive trends that were visible at the end of 2019, De Beers said. Diamond-jewelry sales to Chinese consumers slid 45% year on year in the first quarter of 2020, and by around a third for the entire first half, the company estimated. The second-quarter recovery was “tentative,” mainly benefiting established brands and online sales, it added.
In the US, sales dropped about 40% in the second quarter of 2020, and by just under 20% for the first half. There was “evidence of rising sales” among independent jewelers and chains, as well as online, in June and the third quarter, the company continued. Demand in India dropped by more than 30% in the first half, reflecting a slump of nearly 50% during the April-May lockdown.
In 2019, global diamond-jewelry demand increased 0.5% to $79 billion — a weaker growth figure than in previous years as the strong dollar dented sales in China. Demand rose 4% in the US and 3% in Japan, offsetting weaker figures in other markets. The US expanded its share of the polished-diamond market to 48%, from 46% in 2018, while China slipped to 15% from 16%.
The Chinese yuan depreciated against the dollar in 2019 amid a trade war between Beijing and Washington, DC. In local-currency terms, demand from Chinese consumers climbed 1%.
Africa-focused Gem Diamonds became on Wednesday the latest miner to show signs of a slow but steady recovery in the market after showing it had swung to positive cash flow and slashed debt on the back of rising diamond prices.
The company reduced its net debt position by $6.6 million in the July-September quarter, ending the period with $1.1 million in cash. This compares to a net debt of $5.5 million in the first half of the year.
The sale of seven diamonds for more than $1 million each helped the miner’s bottom line, generating revenue of $25.6 million during the period.
The company achieved an average diamond price in the third quarter of $2,215 per carat, up from $1,714 per carat in the first half of the year.
“These prices achieved, on a like-for-like basis, are higher than those realized in the pre-covid-19 market conditions of the second half of the 2019 [financial year]”, chief executive Clifford Elphick said in the statement.
The apparent ongoing recovery in the diamond market is still thought to be fragile. De Beers, the world’s largest diamond producer by value, said in early October it was too early to be sure of a sustained upturn in trading conditions.
“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,” BMO Analyst Edward Sterck said in a note last month.
Letšeng back at full tilt Gem Diamond’s Letšeng mine in Lesotho returned to full ore mining and treatment capacity in a phased manner during the second quarter, the company said.
Enhanced focus on stability and overall uptime of the Letšeng plants resulted in a conscious decision to reduce the instantaneous feed rate to each plant to reduce feed variability and enhance recovery, Gem noted.
Since acquiring Letšeng in 2006, Gem Diamonds has found more than 60 white gem quality diamonds over 100 carats each, which makes the mine the world’s highest dollar per carat kimberlite diamond operation.
The company recently secured a 10-year extension for its mining lease, with the government of Lesotho granting the company exclusive rights for further renewals.
At an average elevation of 3,100 metres (10,000 feet) above sea level, Letšeng is also one of the world’s highest diamond mines.
Global miner Rio Tinto is seeking court approval to sell its partner’s share of diamonds from a mine in Canada’s Northwest Territories, a filing showed, hoping to recover around C$120-million plus legal fees and other costs.
Rio owns 60% of Diavik Diamond Mines Inc (DDMI) and says it is owed C$119.5-million plus about C$2.4-million in fees by junior partner Dominion Diamond.
Dominion holds a 40% stake in the northern mine, located about 300 km north of the territorial capital of Yellowknife.
Closely held Dominion sought creditor protection in April, saying it could not afford Rio’s cash calls amid coronavirus-related disruptions in the global diamond industry.
Dominion said October 9 a proposed deal to sell its nearby Ekati mine to an affiliate of its parent company The Washington Companies for $126-million fell apart. That deal did not include its minority Diavik stake.
DDMI said in court filings that Dominion has not repaid cover payments and “has no intention of doing so” and that it would be “unjust and inequitable” to not permit DDMI to recover the amounts owing to it in accordance with its joint venture agreement.
“We remain focused on ensuring Diavik diamond mine continues to operate safely, maintaining the mine’s significant contribution to the Northwest Territories and local communities through payments to government, employees and suppliers,” a spokesman for Diavik said on Friday.
A court hearing on the application is set for October 30 in Calgary, Alberta.
Diavik produced 6.7-million carats in 2019 but is scheduled to close in 2025, with cleanup costs estimated at $365.3-million, according to court documents.
Dominion declined comment on the fate of its Diavik stake. Rio has said it will not bid on the minority interest.
Petra Diamonds has abandoned plans to sell the business in favour of a debt-for-equity restructuring, it said on Tuesday, sending its shares lower because of the deal’s dilutive effect on existing stakeholders.
The London-listed company, which mines diamonds in South Africa and Tanzania, had put itself up for sale in June as part of the restructuring process but has received no viable offers, it said.
Its shares have slumped by more than 80% this year as the COVID-19 pandemic has battered the global diamond sector, with mines forced to shut down while consumer demand collapsed. The shares opened with an 18% drop and by 0952 GMT were down 3.6%.
Petra said its existing $650 million of bond debt will be partly replaced by up to $337 million of new notes, including $30 million of new money contributed by debtholders.
The remaining note debt will be converted into equity, leaving debtholders with a combined 91% of the company while diluting existing shareholders to a combined stake of only 9%.
“For existing equity holders it is very dilutive, as expected,” wrote Liberum analyst Ben Davis.
Existing shareholders will be diluted to “next to nothing”, Shore Capital analysts wrote.
Peel Hunt analysts took a more optimistic view, saying the restructuring would give Petra a more sustainable balance sheet and help it to benefit from a recovery in markets for rough diamonds. They calculated that Petra would be left with $444 million of gross debt.
Petra said it expects to seal a “lock-up agreement” cementing the terms with the noteholder group and South African lenders in early November. It expects the restructuring to become effective in the first quarter of 2021.
The agreement also includes new governance arrangements and cashflow controls.
Petra Chief Executive Richard Duffy expressed the company’s gratitude to the noteholder group and South African lenders for their agreement in principle to provide “meaningful additional liquidity” in what has been a difficult period.
The future of the Ekati diamond mine in Canada’s Northwest Territories remains uncertain after Dominion Diamond Mines announced that a deal to sell it to a subsidiary owned by its parent company, The Washington Companies, has fallen apart.
Dominion Diamond reported on Oct. 9 that three insurance companies – Aviva Insurance Company of Canada, Argonaut Insurance and Zurich Insurance – had reached “an impasse” in negotiation with the purchaser, and stated “there is no reasonable prospect of reaching a satisfactory agreement among them.”
Dominion Diamond, which was purchased by The Washington Companies in November 2017 for $1.2 billion, was granted creditor protection in April. Mining was suspended and the Ekati mine placed on care and maintenance in March due to the coronavirus.
Altogether, the three insurance companies have issued about C$280 million in surety bonds to the government of the Northwest Territories that were intended to guarantee that the diamond mine could be closed safely and reclaimed once the mine closes permanently.
The sale was subject to a condition that the insurance companies and the purchaser reached an agreement on the treatment of the existing surety bonds.
Dominion remains in creditor protection until November 7, 2020, unless extended, it said, and is working with its advisors on next steps.
“The company will be assessing all strategic alternatives to return the Ekati diamond mine to full operations for the benefit of its employees, the Northwest Territories and other stakeholders,” Dominion Diamond stated in its news release.
The company has also confirmed that Pat Merrin, the company’s interim CEO since February, has relinquished that role. “In light of this development, Pat has advised that it would be appropriate that he step down as Interim CEO,” a company spokesman wrote in an email to The Northern Miner.
“Kristal Kaye, CFO and Mike Welch, COO will lead Dominion through this challenging period with strong support from the rest of the management team and our independent Chairman Brendan Bell.”
Dominion Diamond Mines is one of the world’s largest producers and suppliers of premium rough diamonds. The company owns a controlling interest in the Ekati diamond mine, which it operates, and 40% of the Diavik diamond mine. It also holds a controlling interest in the Lac de Gras diamond project. All of its assets are in the Northwest Territories.
Sotheby’s will sell the largest vivid purple pink diamond ever to appear at auction, with expectations it could achieve up to $38 million at a November sale.
The oval modified brilliant-cut, 14.83 carat, fancy vivid purple pink, internally flawless, type IIa stone is set to go under the hammer at the Magnificent Jewels and Noble Jewels auction in Geneva on November 11, Sotheby’s said Monday. The company has given the piece a presale estimate of $23 million to $38 million.
“Pink diamonds, perhaps more than any other colored diamond, have captured the imagination of collectors for centuries, making up five out of the 10 most valuable diamonds ever sold at auction,” said Benoit Repellin, head of the auction house’s Geneva Magnificent Jewels auction. “These exceptional sales, all realized in the last decade, are a testament to the growing appreciation and awareness of the great scarcity of these natural treasures around the world, and with the supply of these beautiful stones becoming ever more limited, they are likely to continue to become even more prized.”
Alrosa cut and polished the diamond from a 27.85 carat rough it unearthed at its Ebelyakh deposit in Yakutia in July 2017. The miner named the polished The Spirit of the Rose after the famous Russian ballet premiered by the Ballets Russes company in 1911, and called the rough Nijinsky, in honor of Vasalv Nijinsky, one of the ballet’s principal dancers.
The Spirit of the Rose is one of the three-stone Spectacle collection Alrosa has dedicated to Russian ballet. The set also includes the Firebird, an Asscher-cut, 20.69-carat, fancy vivid yellow, VS1-clarity diamond, which Alrosa sold to Graff for an undisclosed amount in December. The miner is still manufacturing the third stone. Alrosa had originally expected to sell The Spirit of the Rose in November 2019, it said last year.
Sotheby’s will exhibit The Spirit of the Rose in Hong Kong; Singapore; Taipei, Taiwan; and Geneva prior to the sale.
