Rough Diamond – Page 38 – The Diamond Certification Laboratory of Australia (DCLA)

India Trade Urged to Freeze Rough Imports

India’s leading diamond-trade organizations have called on members to stop importing rough for at least a month to prevent an oversupply and ensure banks maintain their credit to the sector.

Companies should consider pausing rough imports from May 15 for a minimum of 30 days, according to a letter from the Gem & Jewellery Export Promotion Council (GJEPC) and four other industry bodies, seen by Rapaport News.

The move — which would be voluntary on the part of the importers — would help the trade recover from the COVID-19 crisis by avoiding a flood of rough entering the pipeline, the letter explained. It would also show lenders that the trade is willing to minimize its debts, thereby dissuading them from slashing credit.

“Such import stoppage will help the industry face the challenge that has arisen out of turmoil in the global gems and jewelry market,” the groups said in their plea to the trade Wednesday. It was signed by heads of the GJEPC, the Bharat Diamond Bourse in Mumbai, the Mumbai Diamond Merchants Association, the Surat Diamond Bourse, and the Surat Diamond Association.

India’s polishing sector and diamond trade are shut until May 3 at the earliest due to a nationwide lockdown aimed at containing the coronavirus. As it stands, any rough that enters India would remain in inventory until business reopens. Meanwhile, closures of retail and trading centers around the world have obliterated polished demand, putting severe pressure on the Indian industry.

The groups that signed the letter have met with leading diamond exporters and other prominent trade members to explore steps to minimize the impact of the downturn. They have also written to the Indian government to inform it of the “precarious” state of the country’s gem and jewelry industry, they said. The GJEPC and the trade will review the matter in the second week of June to decide if further action is necessary.

Source: Diamonds.net

Gem Diamonds Retrieves Another Five Big Stones

Gem Diamonds has recovered five large, high-quality stones at its Letšeng mine in Lesotho, continuing a strong first quarter for the company’s production.

The company unearthed four white diamonds weighing 88, 56, 53 and 33 carats between February 28 and March 3. It also found a “top-quality” 13-carat pink diamond.

Those are in addition to the recovery of a 114-carat stone the miner reported last week. It found a 183-carat, white, type IIa diamond last month.

The miner is ahead of where it was this time last year in terms of its large-stone recoveries. In 2019, Gem Diamonds didn’t find any stones over 100 carats until late March. During that year, the company unearthed a 13.33-carat pink diamond similar to the one it found last week. That stone sold to Graff for $8.8 million, fetching a record average price of $656,933 per carat for Gem Diamonds.

While the recovery of large stones bodes well for the company, it has had to cancel a rough tender that was set to take place in Israel from March 8 to 12 due to the coronavirus, the Israel Diamond Exchange reported. Its Belgium auction will proceed as planned.

Source: Diamonds.net

Ellendale revival on the horizon with increased diamond value

Gibb River Diamonds has completed a review of the mothballed Ellendale diamond mine in Western Australia that will help it edge closer to a proposed restart.

The independent appraisal, which was completed by which was completed by Independent Diamond Valuers International (IDVI) valued gems from the Ellendale 9 East Lobe at $US750 ($1120) per carat.

This price represents a 20 per cent increase since 2008, largely due to the high number of fancy yellow diamonds unearthed at the West Kimberley-based mine.

With these results, a mine revival is looking ominous for the site, which was closed in 2015.

Last December, Gibb River Diamonds accepted an offer from the Western Australian Government apply for new tenements at the site.

“This review is important as it helps Gibb River Diamonds to make commercial decisions regarding mine planning and development priorities at Ellendale,” the company stated.

“Previous operators had a contract to sell the fancy yellow component of their production to Laurelton Diamonds (the jeweller Tiffany & Co).

“It is uncertain if similar premium prices can be achieved with any future fancy yellow goods.

“However, there is a potential opportunity to capitalise in the uniqueness of these fancy yellow goods to sell above market prices.”

The independent appraisal showed a further 18 per cent increase at the Ellendale 9 deposit to $US559 per carat since 2008.

The Ellendale 4 deposit also experienced an increase in value to $US135 per carat, representing a 5 per cent rise in 12 years.

IDVI uncovered 16 per cent fancy yellow diamonds within the Ellendale East Lobe, compared with 9 per cent in the West Lobe.

Gibb River has affirmed that as this information is based on generic sales data, future sales results could “vary significantly” from those in the report, as no sales have occurred since 2015.

Source: australianmining.com.au

De Beers Reveals Overhaul of Sight System

De Beers plans to split sightholders into three categories and offer each group a more bespoke selection of rough diamonds as part of changes to its sales system.

Manufacturers, dealers and retailers will sign specific supply contracts designed for the “broad needs” of each business model, a De Beers spokesperson told Rapaport News Thursday.

The arrangement will take effect in January 2021, following the end of the current sightholder contract, which runs until December 2020. Applications start this week, giving companies four weeks to complete the process, a source in the rough market said on condition of anonymity.

The manufacturer contract will “support the core strengths” of each cutting firm, De Beers explained. Dealers — those that buy rough for resale — will receive a “regular and consistent range of goods,” especially in higher-volume areas. The retailer contract is tailored for companies that sell jewelry to consumers and also have polishing operations. Beneficiation contracts — for sightholders that commit to polishing certain goods in the country where they were mined — will remain as modified versions of the manufacturing contract.

“It is our ambition to offer supplies and services that can help to better support the unique strengths of the great businesses of the diamond midstream, and we feel this approach is the optimal way of achieving this,” the spokesperson said.

The company has long been contemplating changes to its sightholder system amid difficult conditions in the manufacturing and trading sectors, such as tight liquidity and an inventory imbalance. Its supply rules — based on a method known as “demonstrated demand” — have also faced criticism.

Under that system, De Beers mainly determines clients’ rough supply using their purchasing record — a controversial policy because it can encourage sightholders to take on unprofitable inventory to secure future access to its goods. It offers the diamonds in prearranged boxes that customers either take or leave, with only limited flexibility to adjust the contents. That sometimes forces sightholders to buy items they don’t want just so they can get the stones they need.

The current method has come under particular scrutiny given the excess polished in the market last year, which contributed to a slump in rough demand. Last July, Dutch bank ABN Amro urged its clients to stop buying unprofitable rough, and attacked the practice of making purchases purely to maintain supply allocations.

De Beers’ revenue fell 24% to $4.61 billion in 2019, while underlying earnings slid 87% to $45 million, as the supply glut left sightholders unwilling to buy more rough. The situation forced the miner to allow unprecedented refusals and other concessions to avoid flooding the market with goods.

The “need for us to adapt to the changing world” has been the subject of talks between De Beers and sightholders for a while, the company spokesperson added.

“This new approach to sightholder contracts is one way we are going about this,” he noted.

Source: Diamonds.net

Virus Likely to Impact Demand at De Beers Sight

De Beers and its clients expect a slowdown in rough-diamond sales at the company’s Botswana sight this week amid concerns about the coronavirus.

“It’s fair to say there will be an impact on rough demand in the short term,” De Beers chief financial officer Nimesh Patel said Thursday in an interview with Rapaport News. “I’d expect we’d see that at the [February] sight.”

The downturn in China’s retail market due to the virus outbreak has left manufacturers uncertain how long it will take them to sell diamonds they cut. Companies that supply to that region have been especially affected.

Rough that can produce polished with clarity above VS has shown weakness in recent tenders due to the lower Chinese demand, one sightholder said on condition of anonymity. Lower-clarity items destined for the American market have performed better, he added.

“It’s a mixed picture,” the sightholder explained. “People that are strongly focused on the Far East will be reluctant to buy, while those that work with the US and maybe Europe still seem to be going OK.”

De Beers will hold back goods rather than lowering prices, the dealer added, predicting that the sight would be small in value. The miner has kept prices stable for the sale, which began Monday, two sightholders confirmed with Rapaport News.

Another De Beers client expected buyers would take up most of their allocations at this sight, but said the next sale beginning March 30 would be weak if the coronavirus difficulties were still going on.

“I’m hopeful this crisis might not last more than two or three weeks,” he said.

Meanwhile, Patel pointed out that some goods could be rerouted from China to other markets, while certain constant sources of demand, such as weddings, would be delayed rather than disappearing completely. In addition, the midstream has started the year with relatively low inventories due to a reasonably strong fourth-quarter holiday season, putting it in a good position to weather the difficulties, he said.

“We’ve been through periods like this before in the industry,” the executive said. “This is, hopefully, a one-off impact, and the sooner the virus can be contained, and the sooner we can get back to the normal operation of those economies, the better.”

Source: Diamonds.net

India’s rough diamond imports fall sharply

Import of rough diamonds fell 15.54% in the first 10 months of this financial year, according to the Gem & Jewellery Export Promotion Council (GJEPC).

Industry executives anticipate a further fall of 10-15% in February and March, as manufacturers are not keen to build up inventory in the wake of coronavirus outbreak which has affected demand in the major markets of Hong Kong, mainland China and the Far East.

Meanwhile, Russia’s diamond miner Alrosa has granted flexibility

to India’s authorised bulk purchasers of rough diamonds to buy 55% of the contracted volume so that their inventory does not pile up. “The US-China trade war has impacted exports, which in turn has brought down imports of rough diamonds.

Slow demand in the world market has resulted in piling up inventories in FY20,” Colin Shah, vice-chairman, GJEPC, told ET. “Manufacturers wanted to clear their inventories first, before fres ..

fresh stocking. During the Christmas and New Year, there was good demand from the US and Europe and we were able to offload quite a substantial portion of our inventories.”

International agency Rapaport said in its recent report that the recent influx of rough diamonds in the market, coupled with the weakened outlook for China, had raised concerns that the trade would return to an oversupply of rough diamonds.

De Beers reported a 9% year-on-year increase in sales to $545

million in January, owing to firmer prices on select boxes of commercial-quality diamonds.

It said that mining companies were holding large quantities of rough diamonds which they could not sell in 2019. Production of rough diamonds is projected to decrease about 6% this year, although mining companies have enough inventory to offset the decline.

Karowe Yields Massive 549ct. Rough

Lucara Diamond Corp. has unearthed a 549-carat white diamond at its Karowe mine, the fourth-largest stone in the history of the Botswana deposit.

The unbroken stone, which is of “exceptional purity,” is the first large diamond Lucara has recovered using its Mega Diamond Recovery (MDR) equipment, the miner said Wednesday. The unit, which the miner commissioned in 2017, is specifically designed to recover large stones early in the extraction process to reduce the risk of breakage.

The rough stone is worth $15 million to $20 million, according to an estimate by Berenberg investment bank. However, it could potentially sell for more, the bank added.

The diamond came from the high-value EM/PK(S) portion of discovery of Karowe’s lucrative south lobe, Lucara noted. The same area yielded a 176-carat, gem-quality stone earlier this year, and was also the source of the 1,758-carat Sewelô, the 1,109-carat Lesedi La Rona and the 813-carat Constellation.

“Lucara is extremely pleased to be starting off 2020 with the recovery of two large, high-quality diamonds that build on the positive momentum generated following the completion of a strong fourth-quarter sale in December,” Lucara CEO Eira Thomas said.

Lucara has retrieved six diamonds over 100 carats since the beginning of the year. It will announce its plans for the sale of the 549-carat and 176-carat diamonds shortly.

The miner’s share price rose 4% in early trading Thursday following the announcement.

Source: Diamonds.net

Gem Diamonds Recovers 183-Carat Diamond

Gem Diamonds Limited has announced the discovery of an exceptional 183-carat white Type IIa diamond from the Letseng mine in Lesotho on February 3.

The miner also announced that it also recovered two different high quality diamonds, one of 89 carats and the other of 70 carats, from the mine.

The Letseng mine is the highest dollar per carat kimberlite diamond mine in the world.

Zimbabwe to Take Smaller Cut of Diamond Sales

Zimbabwe plans to reduce the percentage of sales diamond miners must pay to the state, aiming to encourage companies to invest in the Marange fields.

The government proposed a new royalty rate of 10% in the annual budget last week. Diamond producers currently pay 15% of gross revenues, but their overall costs have escalated as they shift toward hard-rock — or “conglomerate” — mining, which is lucrative but expensive.

The change could benefit companies such as Russia’s Alrosa, which is exploring for rough in the country, as well as Botswana Diamonds and Vast Resources, which operate a joint venture at the Marange fields.

“The royalty rate of 15% on diamonds was set during the period when mining was predominantly alluvial, and extraction cost was relatively low,” Mthuli Ncube, minister of finance and economic development, explained in his budget statement. “However, diamond miners are [now] exploiting conglomerate deposits, hence the cost of extraction has significantly increased.”

Last year, the state-owned Zimbabwe Consolidated Diamond Company installed a crushing plant at Marange to help it process the harder rock. The nation plans to increase its annual production to 11 million carats by 2023, from 3.2 million carats in 2018, Reuters reported last month.

The state intends to introduce the lower royalty rate on January 1 with the goal of attracting investment in exploration and extraction. The country has also made progress in its plans to repeal an “indigenization” law limiting foreign ownership of diamond and platinum mines, Ncube continued.

Source: Diamonds.net

Alrosa Profit Drops in Third Quarter

Weak rough-diamond demand led to a decline in profit at Alrosa in the third quarter, the Russian miner reported.

Profit slid 44% to RUB 13.5 billion ($211.6 million) for the three months ending September 30, as revenue faltered and the company’s margin fell, it said last week.

Sales decreased 37% to $611 million, as proceeds from both rough and polished diamonds declined. Rough sales slipped 37% to $601 million, while the average price for gem-quality diamonds slid 32% to $135 per carat, reflecting sales of a higher proportion of small-sized diamonds. Sales volume dropped 5% to 6.4 million carats.

“The diamond-jewelry demand was affected by increased macroeconomic uncertainty that put a damper on consumer confidence,” the company noted. “Amid the declining demand since the beginning of 2019, diamond-jewelry manufacturers and cutters have been actively reducing their stocks of end products and rough diamonds.”

Rough output grew 14% year on year to 12.1 million carats for the quarter, stemming from the launch of production at the Verkhne-Munskoye deposit, as well as higher production from the Botuobinskaya pipe.

In the first nine months of the year, the miner produced 29.7 million carats, up 12% year on year. Rough sales for the January-to-September period fell 34% to $2.39 billion.

Alrosa’s sales grew 9% year on year to 264.4 million in October, as prices and demand continued to stabilize, the miner noted. Rough-diamond sales increased 9% to $253.9 million for the month, while polished jumped 17% to $10.4 million.

However, despite the growth in October, weakness in the market affected the company’s ten-month total. In the first ten months of the year, sales fell 31% to $2.7 billion. Rough-diamond sales dropped 32% to $2.6 billion, with polished declining 43% to $47.2 million.

Source: Diamonds.net