Revenue from the Ekati deposit’s rough production soared during the fourth quarter as demand for its goods strengthened, according to owner Burgundy Diamond Mines.
Sales from the Canadian mine rose 37% year on year to $166 million for the three months that ended December 31, Burgundy reported last week. Sales volume jumped 41% to 1.8 million carats, from 1.3 million carats a year before, outweighing a 2% drop in the average price to $93 per carat.
Output increased 19% to 1.2 million carats for the October-to-December period. During the quarter, Burgundy held four auctions, including one for special stones. The miner sold all of its available inventory during those auctions, it noted.
“Each of our four auctions during the December quarter were oversubscribed due to significant customer demand,” said Burgundy CEO Kim Truter. “This has put us in a strong position with a healthy cash balance to fund the upcoming winter-road resupply and to commence the important work activities to extend the mine life at Ekati.”
Burgundy is currently retrieving ore from two sites at Ekati: an open-pit operation at Sable and an underground one at Misery. It is also working on extending Sable underground and is optimizing the Point Lake area.
Burgundy purchased Ekati from Arctic Canadian Diamond Company for $136 million in March.
One of the most famous red diamonds from Brazil is “The Moussaieff Red” which was discovered by a Brazilian miner named Ze Tatu in the state of Minas Gerais.
It is a 5.11 carat, Internally Flawless, Fancy Red diamond which weighed 13.90 carats in the rough — a true treasure from the Brazilian diamond legacy.
A number of remote employees at Rio Tinto’s Diavik diamond mine in Canada died Tuesday after the small plane carrying them to the site crashed.
“We have been informed by authorities that a plane on its way to our Diavik mine, carrying a number of our people, crashed…resulting in fatalities,” said Rio Tinto CEO Jakob Stausholm.
The company has not disclosed how many died on board the aircraft, which seats 19 people. The plane crashed near Fort Smith in the Northwest Territories shortly after takeoff. Rio Tinto employs many remote workers, who operate in shifts at the mine. Because of its isolated location, the miner transports workers by aircraft to and from the deposit.
“I would like to extend our deepest sympathy to the families, friends and loved ones of those who have been affected by this tragedy,” Stausholm said. “As a company, we are absolutely devastated by this news and [are] offering our full support to our people and the community, who are grieving today. We are working closely with authorities and will help in any way we can with their efforts to find out exactly what happened.”
Northwest Territories Premier R.J. Simpson also mourned the loss.
“It is with a heavy heart that I express my deepest condolences to the families, friends, and loved ones of those who were aboard the Northwestern Air flight that crashed outside of Fort Smith today,” he noted. “The impact of this incident is felt across the territory…. As we seek to understand the circumstances of this tragedy, I’d also like to extend a heartfelt thank you to the first responders and rescue teams who continue to work tirelessly at the crash site.”
It is unclear whether the crash will impact diamond production or sales at Diavik.
Botswana Diamonds has announced that a gravity survey has been completed over four high-grade geophysical targets that had good magnetic response in a previous survey undertaken by the company.
“Preliminary results from this gravity survey show that at least one of the four targets, which is located 6 km south of the existing KX36 diamond discovery, has an excellent gravity response like that of known kimberlites and similar in size to KX36. The survey on the KX36 size anomaly is being repeated and correlated with previous results for confirmation. Next steps will be a drilling plan.
The new kimberlites targets have great potential to upgrade the existing resources in the area, including at the Ghaghoo Mine, which is currently under care and maintenance and only 60 km away from the KX36 project.
The KX36 project is a 3.5 ha kimberlite pipe in the Kalahari. The pipe has resources of 17.9 Mt at 35 cpht and 6.7 Mt at 36 cpht at $65 /ct. The modelled grade range is 57-76 cpht at an estimated diamond value of up to $107/ct.
Botswana Diamonds Chairman, John Teeling, commented: “This is the first strong indication of additional kimberlites around the KX36 discovery. Kimberlites come in clusters, but extensive exploration has to date not been successful.
“The anomaly has a strong gravity signature which gives us confidence that when drilled, it will prove to be a kimberlite. The anomaly sits on a structure like all the other kimberlites in the Kalahari, which further increases confidence. It is early days but very good news”.
De Beers has introduced a new online “sealed bid” tender for some of its rough diamonds.
The Offer, which went live last week, allows buyers to key in the price they’re prepared to pay for a lot, unseen by other bidders.
It is an additional sales channel rather than a replacement for the online auctions that have been taking place since 2008.
Online auctions have accounted for the 10 per cent of De Beers production that is not sold at Sights.
“We are constantly looking at new ways for customers to source natural diamond supply with a view to make the experience as simple and flexible as possible while keeping commerciality in mind,” said Rhyzard Bilimoria, account director in De Beers Group Diamond Trading.
“We believe that for certain product ranges and during certain industry conditions, the Offer represents the most effective channel to meet customer and industry needs.”
He said the Offer was quick, simple, confidential and allowed buyers to bid any amount.
“We recognise that in periods when trading conditions are evolving, different customers can perceive different value depending on their specific activities – it is therefore beneficial to implement a sales process where there is no visibility of other bidders’ activity, as this supports customers’ ability to make independent assessments of value that reflect their own underlying demand.”
De Beers cancelled its online auctions in the last two sales cycles of 2023 amid slow demand.
On Monday, De Beers’ customers turned up at the first day of the miner’s January sight to find rough prices were down by an average of 10% to 15%. The reductions were more drastic than many had predicted.
The drops ranged from slight adjustments for the more in-demand smalls, all the way to an estimated 20% to 25% cut for 2- to 4-carat, lower-clarity rough, sources said.
Sightholders usually celebrate a price decrease, since their margins can be thin at the best of times. But, immediately, the industry started asking the obvious question: Will this cause polished prices to fall?
The basic assumption is that cheaper raw materials mean cheaper end products. Yet the situation with diamonds is more complicated.
First, there are different ways of pricing polished. You can sell based on the current cost of replacing the goods — a method that would imply polished prices should fall, since De Beers rough is now cheaper. However, it’s also possible to price according to the input cost, with the vendor aiming for a certain profit based on how much the rough actually cost. This would, in theory, mean the latest drop in rough prices would not impact polished until around March, when the new, cheaper material enters the market as polished.
Still, most sightholders that spoke to Rapaport News this week don’t expect polished prices to suffer — though the people who buy their polished might disagree. The miner’s move, sightholders argue, was merely an adjustment to polished-price levels and to the price of rough at open tenders and auctions.
De Beers had priced its goods some 15% higher than the rest of the rough market, as it chose to sell less volume since August rather than discounting during the market slump. Its last significant price decrease before this was in July 2023. Since the start of that month, the RapNet Diamond Index (RAPI™) for 1-carat diamonds has fallen 12.5%.
Price drops at De Beers are not always in sync with the market. In recent years, the company has held off reducing prices until crises have eased, as it did in 2020 following the first round of Covid-19 lockdowns. De Beers sold just $216 million in rough at its last two trading sessions of 2023 as it followed this policy amid weak demand.
But the company needs revenue after incurring a loss in the second half of last year. It appears to have chosen the market improvement as an opportune time to stimulate sales.
“In the final quarter of 2023, we saw some stabilization in polished prices, including a number of areas of natural polished now starting to see some price increases,” a De Beers spokesperson said in a statement Wednesday. “Following this stabilization, we have realigned our rough-diamond trading activities, in terms of prices, volumes and supply flexibility, to reflect prevailing industry conditions.”
With the market in flux, De Beers also showed sightholders sample assortments of rough diamonds that indicated the types of goods and prices customers can expect for this year. Based on these so-called “to see” boxes, sightholders were able to apply for additional goods if their need for rough has increased since they submitted their supply applications in mid-December, the spokesperson explained.
However, market participants expect total sales at the sight of $300 million to $400 million — low for January, which is usually a time of post-holiday restocking. The recent season in the US was okay, but Chinese demand remains slow.
Whether sightholders maintain this cautious approach — and De Beers doesn’t sell too much — will be crucial. Excessive buying could lead to a repeat of last year’s oversupply, which ended with India’s two-month voluntary freeze on rough imports. During the recent crisis, De Beers continued selling — albeit at lower volumes — even when competitor Alrosa canceled sales.
At the January sight, De Beers also removed the extra concessions that had allowed sightholders to refuse goods in the final sights of last year without being penalized. The end of this flexibility increases the danger that goods will flood the market and that manufacturers will sell polished cheap to increase cash flow and raise money for rough.
The fact that De Beers diamonds remain relatively expensive could itself support polished prices, since sightholders have no room to offer further discounts.
“There’s no hooray if you look at those prices,” said one sightholder, noting that even the new rates will probably enable businesses to break even rather than turn a significant profit. “It’s just aligning with [reality]. It’s not like you’re going to make 10% [profit].”
Another sightholder agreed the reductions didn’t go far enough — but believed it would likely be up to the trade to drum up polished demand rather than expect further cuts to rough prices.
“If anybody thinks this is a price reduction — no, it’s a halfway correction, and not even achieving the final goal,” he asserted. “But I also believe they won’t do much [in terms of price cuts] after this. I think their expectation is: ‘Listen, we got you 60% of the way. The other 40%, you guys have to jump up now.’”
Revenue at Petra Diamonds declined in the first fiscal half as slow demand and India’s two month buying halt affected the miner’s rough sales.
Sales slipped 9% year on year to $187.8 million in the six months that ended December 31, the company said Tuesday. The drop came despite a 27% increase in sales volume to 1.7 million carats, as like for like prices during the period dropped 13% and the miner offered a weaker product mix, it explained.
Group production grew 2% to 1.4 million carats for the first half, partly reflecting the ramp up to full output at the Williamson deposit in Tanzania. Exceptional rough stones those fetching $5 million or more didn’t contribute any revenue during the period, the miner noted.
Petra is on track to meet its production guidance of between 2.9 million and 3.2 million carats for the full fiscal year ending June 30, it said. However, the miner expects output to come in at the lower end of that range.
The company’s net debt rose to $212.3 million as at December 31, compared to $176.8 million on June 30, it noted. The increase is due to the timing of tenders, the continued lower prices for rough, and the need for capital to resume operations at Williamson and extend the life of the Finsch and Cullinan mines in South Africa, Petra added.
Rio Tinto’s diamond production fell in 2023 following the closure of portions of its Diavik mine in Canada earlier in the year.
Total production dropped 28% to 3.3 million carats for the full year, the company said Tuesday. Rio Tinto completed mining at Diavik’s A418 underground area and at its A21 open-pit kimberlite pipes, it explained. Improvements in the volume of ore produced at the A154N underground partially offset the loss in output from those portions.
In the fourth quarter, output slipped 50% year on year to 659,000 carats, and was down 13% from the previous quarter.
Diavik is Rio Tinto’s sole diamond mine following the closure of Australia’s Argyle deposit in November 2020. The miner’s share of Diavik increased from 60% to 100% in November 2021, when it assumed control of the asset following the inability of its joint-venture partner, Dominion Diamond Mines, to pay its share of upkeep. In November, Rio Tinto also sold its 75% share of the Fort à la Corne diamond exploration project in Saskatchewan to joint-venture partner Star Diamond Corporation, in an effort to focus on metals and minerals.
Rio Tinto will spend $40 million to move into underground mining at the A21 portion of Diavik, which it believes could add more than 2 million carats of rough production, it reported in February 2023. That expansion is due to keep the mine in operation until the first quarter of 2026.
Meanwhile, the company did not provide rough-production guidance for 2024.
India will lead demand for natural diamonds in 2024, says David Kellie, CEO of Natural Diamond Council (NDC), as US buyers increasingly switch to lab grown.
“The Indian market remains the strongest growth market in the world because of its strong financial position and changing demographics,” he told The Economic Times, in India.
“Indian women are now financially stronger, and they are driving the demand. The key economic indicators in the US are not yet favourable for a demand recovery in diamond purchase.”
Kellie (pictured) predicts a polarization between the natural and lab grown markets, with a price difference currently at 80 per cent to 90 per cent.
Natural diamonds will become increasingly rare, he said, with no new mines in prospect, and with miners digging deeper, and spending more, to reach remaining deposits.
De Beers reduced rough-diamond prices by an average of 10% to 15% at this week’s sight, aiming to stimulate sales and bring its rates more in line with the rest of the market, sources told Rapaport News.
The miner lowered prices by 5% to 10% for rough under 0.75 carats, with thinner or no reductions for the smallest items that produce melee, sightholders and other market insiders said Monday on condition of anonymity.
Rough weighing 0.75 to 2 carats saw reductions of approximately 10% to 15% on average, while prices of 2-carat and larger goods dropped about 15%, the sources added.
Select makeables — the 2- to 4-carat rough stones that produce SI2 to I2 diamonds — fell more sharply, with estimates ranging from 20% to 25%. This reflects the impact of lab-grown competition on mid-market US demand in the past year, sightholders explained. De Beers does not comment on pricing.
De Beers tends to sell less volume during a downturn and reduce prices only once the polished market has improved. The RapNet Diamond Index (RAPI™) for 1-carat diamonds slid 21% in 2023, the worst year on record for the category, but sightholders reported a moderate uptick in US demand since the holiday shopping season began, though Chinese orders remain weak.
The global market also stabilized as a result of India’s two-month voluntary freeze on rough imports, which ended December 15.
“[In the past, De Beers] didn’t want to change prices because they didn’t know [what the state of the] polished [market] was,” one of the sources commented. “They have an idea where polished is now, and have adjusted rough to polished.”
However, several sightholders said the drops did not go far enough, with De Beers’ prices still above those of outside tenders and auctions and also too high for many manufacturers to make a profit.
Even with the price reduction, the sources expected demand at the sight to be limited, with sales of around $300 million. The trading session, De Beers’ first of the year, began Monday and runs through Friday in Gaborone, Botswana.
