Australia’s Lucapa Diamond has recovered a 203 carat diamond at its prolific Lulo mine in Angola, the fifth largest ever found at the operation.
The diamond is also the third 100 carat plus stone found at Lulo this year.
Lucapa said the high quality, type IIa diamond was recovered during the processing of run of mine stockpiled ore and its recovery follows those of a 162 and a 116 carat diamonds on successive days last month.
The mine, which hosts the world’s highest dollar per carat alluvial diamonds, began commercial production in January 2015. Only a year later, it delivered the largest ever diamond recovered in Angola a 404 carat white stone later named the “4th February Stone”.
Lucapa has a 40% stake in the Lulo mine. The rest is held by Angola’s national diamond company Endiama and Rosas & Petalas, a private entity.
Angola is the world’s fifth diamond producer by value and sixth by volume. Its industry, which began a century ago under Portuguese colonial rule, is successfully being liberalized.
The Group of Seven (G7) import restrictions targeting Russian diamonds will have a detrimental impact on Botswana’s diamond trade and may reverse the gains the country has made in recent years, government officials told Rapaport News.
The proposal to create a single-node location through which all diamonds should pass to verify G7 compliance would be a logistical nightmare for producer countries, Lefoko Moagi, Botswana’s minister of mineral resources, green technology, and energy security, said in an interview.
“It creates added time in terms of processing our diamonds and it affects our beneficiation trajectory,” Moagi explained. “This may bring about added costs and unintended consequences that will affect the producer countries.”
In December, the G7 — which comprises Canada, France, Germany, Italy, Japan, the UK, and the US, as well as the European Union — announced new restrictions to prevent the flow of Russian diamonds to their markets. The measures include a ban on direct imports of diamonds from Russia, taking effect at the beginning of the year. From March 1, the sanctions were extended to Russian-origin diamonds polished in a third country, which prompted each G7 nation to issue interim guidelines requiring self-certification by members of the trade declaring their goods did not originate in Russia.
A blockchain-enabled traceability system will be implemented in the final stage on September 1, which the European Commission stipulated will require verification of the diamonds in Antwerp.
Systems in place Botswana is concerned such a system will result in delays and additional costs, and consequently slow down the development of its own trade.
The government is petitioning the G7 to allow such verification to take place in the producer countries, particularly in Botswana, since it can easily adjust its processes to meet the G7 requirements, noted Emma Peloetletse, permanent secretary to the president, in a separate interview.
“Why not build on what already exists, because we have it?” she contended.
The government hosted the G7 working committee in January to demonstrate its systems and to convince the group that a local registration point can be trusted without fear of contamination by Russian goods.
“The G7 working group was shocked to see our robust systems,” Peloetletse said. “These took years of work and investment to develop.”
She expressed frustration at the lack of engagement by the G7 following the visit and that the working group didn’t have the answers to Botswana’s questions.
Risk to the economy As a nonaligned nation, Botswana is not opposed to the sanctions, Peloetletse stressed. The country is primarily concerned about the effect their implementation will have on its diamond industry, and subsequently on the economy, she added.
Diamond mining accounts for an estimated 20% of gross domestic product (GDP), while diamond cutting, polishing, and trading makes up about 5%, according to local economist Keith Jefferis, managing director at econsult Botswana.
The domestic economy was estimated to grow 3.2% in 2023, Finance Minister Peggy Serame said in her budget speech on February 5. That represents a slowdown from 5.5% growth in 2022, reflecting “the relatively weak performance of diamond trading and mining activities throughout 2023,” she explained.
Serame projected the economy would grow 4.2% in 2024, but noted several risks that could reverse such gains. Among them are those from within the diamond industry, particularly in the beneficiation subsector, “which would be worsened by the G7 plan to verify the origin of non-Russian goods through diamond certification in Antwerp,” the minister said.
After the De Beers high The government continues to rely on diamonds to elevate the standard of living in the country and expects its new sales agreement with De Beers, announced last June, will be a catalyst for continued economic growth.
“Diamonds are something we guard with our lives, given what it has done for Botswana and what it can still do for the country,” Moagi said. “That resonated throughout our negotiations with De Beers. There was a meeting of minds with them to reach an agreement that can really boost the economy.”
The agreement will see state-owned Okavango Diamond Company (ODC) increase its share of local production from 25% to 50% over the next decade. That will enable ODC to introduce contract sales and subsequently designate rough for beneficiation — something it has been unable to do with its current auction-only sales channels.
The government wants more diamonds to be manufactured in Botswana and views that program as a path to encourage local entrepreneurship in the diamond trade, Moagi explained. ODC is planning to include an allocation for citizens to incubate local diamond manufacturers looking to develop in the beneficiation sector, he continued.
The deal also marked the establishment of the Diamonds for Development Fund (DDF) as a way to enable entrepreneurship both within and outside the diamond industry, the minister explained.
While the De Beers agreement left the government on a high, the G7 plans burst its bubble, Peloetletse added. “Now, when we are supposed to reap what we have sowed, we get this,” she said. “It has left us very anxious about our prospects.”
African lobby The concern is shared by other producer countries. Botswana President Mokgweetsi Masisi met with his counterparts in Angola and Namibia in late February and sent a joint letter to the G7 leaders outlining their concerns. Their sentiment was echoed by the African Diamond Producers Association (ADPA), which emphasized the negative economic consequences the G7 measures would have on the entire diamond supply chain.
“In the absence of proper consultation with African producers, it is concluded that the G7 restrictions on diamonds will disrupt the current supply chains and the fundamental business model of the diamond sector by introducing segregation requirements,” the ADPA said in its February 29 statement.
Minister Moagi is hoping for stronger engagement with the G7 decision-makers, rather than just the working committee. There is a sense that not all G7 members agree with the proposed approach to implementation, and that the African producers can leverage their position to negotiate a more practical approach, he said.
Brace for the worst Ultimately, the African producers, and Botswana in particular, want a stronger say in how their production is handled and leveraged.
While giving license to others to tell the Botswana story, there has been a realization that those outsiders have their own agenda, Peloetletse said. “There is nobody who can tell our story better than us,” she stressed, while referencing the country’s path toward independence as a former British protectorate.
In a similar tone, Moagi stressed that from Botswana’s perspective this is more than an economic issue: “It is an assault on our democracy and the sovereignty of countries,” he cautioned. Peloetletse added that the G7 sanctions constitute just one example in which Botswana is still trying to exert its independence.
Other battles include the reclamation of land from foreign entities, after the government in November set aside BWP 1.4 billion ($102.6 million) for the acquisition of 45,000 hectares in the country’s Northeast District from British-registered Tati Company. While Tati’s status as the largest private landowner in Botswana stems from a 1911 allocation, the recent deal sparked a debate about why the country should pay such a hefty price for its own land.
The government is also engaged in a battle over its wildlife policy as European legislators attempt to ban the import of animal-trophy hunting products from the country. With the largest herd of elephants in the world, and an oversupply of game, the country must manage its ecosystem and incentivize communities to coexist with the animal population, Peloetletse explained. The government has granted the rural communities quotas for trophy hunting, arguing that banning the practice would greatly affect the livelihoods of their residents.
The convergence of these issues, and most notably the potential impact of the G7 sanctions on its diamonds, has left the government feeling uneasy and uncertain how to move forward, said Peloetletse, whose role is to advise President Masisi.
“We have to brace for the worst-case scenario because it’s not clear the G7 is willing to listen or know what it means to our economy,” she said. “Once you close the diamond tap, and the tourism tap, then we’re done, and that’s not what Botswana wants. We aspire to be a high-income country. We want to liberate ourselves.”
Antwerp’s diamond dealers face long and costly delays following an EU ban on Russian-origin diamonds that took effect on March 1 and has slowed imports, they say in a letter seen by Reuters.
The letter, dated March 13, said the disruptions would erode the competitive advantage of the centuries-old Antwerp diamond trade. It was addressed to Belgium’s main diamond industry group, Antwerp World Diamond Centre (AWDC), and requested a review of the new procedures.
Any impact is likely to be reduced by sluggish market conditions. Diamond inventories are high and prices have fallen. Paul Zimnisky, a global diamond analyst, said last month that prices were down 25% from their early 2022 peak.
Al Cook, CEO of mining company Anglo American’s De Beers’ diamond business, has said the miner would reduce production this year in response to surplus supply.
“While we fully support the decisions taken by Belgium, the European Union, and the G7 nations, in regards to the sanctions of January 1st 2024, the implementation of the measures to enforce the sanction has adversely affected all of our operations,” said the letter, signed by over 100 local firms.
“The intention was to prevent the flow of diamonds from sanctioned states, but the reality we face is the severe disruption of our supply chains, and alienation from the rest of the global trade.”
A Belgian government official said the delays were temporary and were easing.
The EU and Group of Seven (G7) countries agreed to ban direct imports of Russian diamonds to their markets as of Jan. 1 and before phasing in a full ban on Russian-origin stones via third countries from March 1 because of Moscow’s war in Ukraine.
Russia’s state-run Alrosa, which together with De Beers is one of the world’s top diamond producers, was also placed under sanctions by the EU.
Diamond hub Antwerp remains the world’s biggest diamond hub though 90% of stones are polished in India. Belgium pushed hard for the G7 to adopt a version of its proposed plan to try to prevent Antwerp from losing more business after major Western jewellers began eschewing Russian stones.
Diamond dealers said their shipments have been held up for over a week at customs even if the gems were straight from African producers.
The Belgian government official said shipments pending would be processed within 24 hours.
“The indirect ban coincided with the Hong Kong Diamond Fair which is an annual peak period… This, in combination with the expected teething problems caused some initial delay in processing of shipments during the first days,” he said.
Diamond dealers say they expect more problems when the additional tracing requirements take effect from September.
“We see the procedures will cause Antwerp to further lose competitive advantage… rather than deal a meaningful blow to any sanctioned products,” the letter said.
“The current trajectory threatens the existence of Antwerp’s diamond industry, a heritage of six centuries.”
The head of the AWDC, Ari Epstein, said the group would soon present the new measures, adding it was “acutely aware of the challenges and disruptions this timing may have caused”.
“Let me be unequivocally clear: the violation of sanctions is criminal in nature and not taken lightly by governments or our organization. Our commitment to compliance… is unwavering and absolute,” Epstein said in a statement.
Source: Dmitry Zhdannikov and Julia Payne mining.com
Anglo American has announced the value of rough diamond sales (Global Sightholder Sales and Auctions) for De Beers’ second sales cycle of 2024, amounting to US$430 million.
The provisional rough diamond sales figure quoted for Cycle 2 represents the expected sales value for the period and remains subject to adjustment based on final completed sales.
Al Cook, CEO of De Beers, said: “I’m pleased to see a further increase in demand for De Beers rough diamonds during the second sales cycle of 2024. However, ongoing economic uncertainty in the US has led to retailers restocking conservatively after the 2023 holiday season. Consumer demand for diamond jewellery is growing in India but remains sluggish in China. Overall, we expect that the ongoing recovery in rough diamond demand will be gradual as we move through the year.”
The US has sanctioned Zimbabwe President Emmerson Mnangagwa for corruption in connection with gold and diamond smuggling, as well as human-rights abuses.
The Treasury Department’s Office of Foreign Assets Control (OFAC) accused Mnangagwa of “providing a protective shield” to gold- and diamond-smuggling networks that operate in Zimbabwe, it said last week. He is also accused of directing Zimbabwean officials to “facilitate the sale of gold and diamonds in illicit markets” and taking “bribes in exchange for his services.”
The US has also restricted Mnangagwa for being a leader or official of entity, including any government entity, that has “engaged in, or whose members have engaged in, serious human-rights abuses,” OFAC explained.
“The Zimbabwe president is a foreign person who is a current or former government official, or a person acting for or on behalf of such an official, who is responsible for or complicit in, or has directly or indirectly engaged in, corruption, including the misappropriation of state assets, the expropriation of private assets for personal gain, corruption related to government contracts or the extraction of natural resources, or bribery,” OFAC stated.
OFAC issued the new sanctions after US President Joe Biden signed an executive order that terminated Zimbabwe’s national emergency and revoked sanctions on the entire country, so as not to target its citizens.
“The US remains deeply concerned about democratic backsliding, human-rights abuses, and government corruption in Zimbabwe,” said Wally Adeyemo, deputy secretary of the treasury. “The changes we are making today are intended to make clear what has always been true: Our sanctions are not intended to target the people of Zimbabwe. Today we are refocusing our sanctions on clear and specific targets.”
Lucapa Diamond Company and its partners Endiama and Rosas and Petalas, have recovered two diamonds of over 100 ct each from the terraces of Mining Block 46 at the Lulo mine, in Angola.
The miner plans to offer the first, a 162.42 carat, type IIa diamond, as part of its normal run-of-mine sales later this month, it said Tuesday. It will sell a 116.14 carat rough, which it discovered the next day, by tender at a future date, along with other high-value, type IIa diamonds the company unearthed from the deposit recently.
Both diamonds were recovered in February, with a 162 ct diamond recovered first, and a 116 ct diamond recovered the following day.
The 116 ct Type IIa diamond will be sold through a tender at a future date, along with other high-value Type IIa diamonds recovered recently, while the 162 ct diamond will be sold as part of normal run-of-mine sales later this month.
Lucapa has assets in Africa and Australia, with interests in the Lulo diamond mine and the Mothae diamond mine, in Lesotho.
Sarine recorded a $2.8m loss for 2023 as it battled macro-economic challenges in China and beyond, as well as increasing disruption from lab growns.
The Israel-based diamond tech business made an $8.8m profit the previous year. Revenue for 2023 was down 27 per cent to $42.9m.
Sarine said sales of equipment and the recurring scanning revenues that came from them had been hit by lower consumer demand and manufacturers’ reduced polishing activities.
Sales to India, its biggest single market by far, fell 27 per cent to $22m.
However it did sound a note of optimism after a “challenging year”, suggesting that a sharp fall in lab grown retail prices could lower retailers’ margins and make them less attractive.
“While it may be too early to call this a new trend, the slowdown could indicate that the natural diamond and LGD segments of the diamond jewellery market are reaching a new equilibrium,” the company said.
Sarine said it had launched its Most Valuable Plan (MVP) for the optimal planning of small rough diamonds and had adapted rough planning technologies to lab growns to attract new customers and generate additional recurring revenues.
The US and the UK will require importers of polished diamonds weighing 1 carat and above to apply a “self-certification” declaring the stones are not of Russian origin, while the UK will also expect documentary proof in some cases.
The new US guidelines are a follow-up to last month’s directive by the US Office of Foreign Assets Control (OFAC) implementing tighter restrictions on loose Russian diamonds and those set into jewelry that had been in part or fully manufactured or “substantially transformed” in another country. The rules address a loophole that had been in place since the US first imposed sanctions in March 2022.
The US Customs and Border Protection released an update to the bans beginning March 1, calling for importers to upload a PDF on official company letterhead, it said last week. For nonindustrial diamonds, the self-certification should state: “I certify that the nonindustrial diamonds in this shipment were not mined, extracted, produced, or manufactured wholly or in part in the Russian Federation, notwithstanding whether such diamonds have been substantially transformed into other products outside of the Russian Federation.”
Those bringing in diamond jewelry or unsorted diamonds should submit a document saying: “I certify that the diamond jewelry and unsorted diamonds in this shipment are not of Russian Federation origin or were not exported from the Russian Federation.”
The UK government’s Department for Business and Trade has followed suit, noting that supplier declaration of compliance with the sanctions “may be acceptable,” but that “traders should be prepared to provide documentation to demonstrate evidence of a stone’s supply chain.” That evidence can include the original Kimberley Process (KP) certificate issued when shipped from the diamond’s origin country, an invoice, a certificate of origin issued by a chamber of commerce, or a diamond origin report. The government also distributed rules for diamonds manufactured in another country that were outside of Russia before March 1.
Last week, the London Diamond Bourse (LDB) held an emergency meeting to discuss the ban due to the “absence of clarity and guidance…as to how we might conform with the restrictions…in terms of paperwork and provenance” before the March 1 launch, it said. The exchange noted it was in an “invidious” position and felt its members and the greater trade should avoid importing polished loose diamonds above 1 carat until there is “less ambiguous guidance.” The bourse may put out updated guidance following the release of the new rules.
While neither the US or the UK has given a timeline as to how long these guidelines will be in effect, it’s likely the less restrictive rules will only be valid during the “sunrise period,” which ends August 31 and allows importers time to become accustomed to the new measures. The European Union has stated that it would accept documentation proving non-Russian origin during the initial timeframe but will expect all stones passing through Antwerp to be placed on a traceability system beginning September 1. At that point, restrictions in all Group of Seven (G7) nations — Canada, France, Germany, Italy, Japan, the US and the UK, as well as the EU — will expand to include diamonds weighing more than 0.50 carats.
For its part, Canada also produced a statement noting it would comply with the March 1 curbs against indirect imports of Russian-origin diamonds.
“Canada has been at the forefront of imposing economic barriers on the Putin regime,” said Mélanie Joly, the country’s minister of foreign affairs. “Along with our allies and partners, we have imposed severe sanctions on the Russian regime, and we will continue to do so to hold [Russian President Vladimir] Putin and his enablers to account.”
The current self-certification rules are likely to provide a temporary solution to concerns industry groups voiced over a proposal that all diamonds would be funneled through Antwerp for screening and certification prior to arriving at their destination countries, a move the organizations feared would harm the rest of the industry.
On Saturday, India’s Gem and Jewellery Export Promotion Council (GJEPC) sent a message to members urging them to “review guidelines meticulously,” and “exercise utmost caution when dispatching shipments to G7 countries.” The council also advised exporters to “maintain meticulous records of all documents of import and purchase.” A large portion of the world’s rough is manufactured in the country before making its way to consumer nations.
“It is crucial to emphasize that while some of the G7 countries/EU have already issued guidelines to their importers, a few are still in the process of finalizing theirs,” the GJEPC said. “We believe even the issued ones are initial guidelines and are subject to changes [and] updates during the course of time.”
Alrosa’s revenue rose in 2023 as the Russian diamond miner continued to sell despite sanctions.
Sales increased 9% to RUB 322.57 billion ($3.55 billion) for the year, the company reported Wednesday. However, net profit fell 15% to RUB 85.18 billion ($939.3 million).
Alrosa and its diamonds have been the subject of sanctions by the US and other Western countries since Russia’s war in Ukraine began in February 2022. Major markets including India and China still permit imports of Russian diamonds. On March 1, the US will introduce stricter measures banning the import of 1-carat and larger stones of Russian origin, even if they went through manufacturing in a third country.
The miner’s announcement was its second full results statement since March 2022. On both occasions, it withheld information on the destination of its sales, which usually shows Belgium, the United Arab Emirates (UAE) and India to be the largest buyers.
Last week, De Beers reported a 36% drop in 2023 revenue for a total of $4.27 billion, with the diamond unit recording a net impairment of $1.56 billion, reflecting a weaker demand outlook.
