De Beers sightholders – Page 3 – The Diamond Certification Laboratory of Australia (DCLA)

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

De Beers Optimistic After 2019 Earnings Slump

Rough and polished diamonds next to each other at De Beers

De Beers gave a positive outlook for 2020 due to an improvement in the industry’s inventory situation, despite growing concerns about Chinese demand.

Early data from the holiday season indicate midstream stock levels are more balanced than they were, the company reported Thursday in parent company Anglo American’s annual financial results.

The miner maintained its production forecast of 32 million to 34 million carats for the year, citing a “currently anticipated improvement in trading conditions compared with 2019.”

Last year was the worst for De Beers in the past decade, as rough demand plummeted amid an oversupply of polished in the manufacturing and trading sector.

The miner reported that underlying earnings slid 87% to $45 million, while revenue fell 24% to $4.61 billion, its lowest level since the financial crisis.

Rough sales declined 26% to $4 billion, with volume down 8% to 30.9 million carats. De Beers’ average selling price slumped 20% to $137 per carat, reflecting a 6% decline in like-for-like rough prices, as well as weak demand for higher-value diamonds.

Sales from other divisions, which include the Element Six industrial-diamond unit and Lightbox, its lab-grown brand, fell 17% to approximately $570 million, according to Rapaport calculations.

Last year started on a weak note, as stock-market volatility and the US-China trade war led to sluggish 2018 holiday sales, leaving the trade with higher stock levels than it had expected, the company explained.

The situation worsened as US retailers took more goods on memo and pruned their physical-store networks, while consumers shifted further to online buying, reducing the need for inventory.

The midstream also suffered from tight bank financing, dampening demand for more rough, De Beers noted.

De Beers observed “stable” consumer demand so far in 2020, especially in the US, but cautioned that several uncertainties — including the coronavirus outbreak — could pose a threat.

An increase in online purchasing has caused retailers to destock, while US-China trade tensions and geopolitical escalations in the Middle East could also affect economic growth and consumer sentiment, the company added.

Source: Diamonds.net

De Beers Plans Overhaul of Supply Policy

De Beers plans to abandon its practice of using sightholders’ purchase history as the main factor in determining how it allocates rough supply, sources have told Rapaport News.

The move, which would go into effect from 2021, would see the miner shift to more subjective criteria for deciding the value of goods each client receives.

The current system, known as “demonstrated demand,” requires sightholders to buy the rough that De Beers has allotted them or risk losing access to De Beers’ diamonds in future. The method has faced criticism for encouraging dealers and manufacturers to take on unprofitable inventory.

But with the current sightholder agreement expiring at the end of this year, De Beers has told clients demonstrated demand will not be the main driver of allocations in the new contract period, the sources said. Discussions about the matter continued at this week’s January sight in Botswana.

The proposals include studying data about clients’ business activities, as well as qualitative factors, to help determine whether companies should be on the client list, a sightholder explained on condition of anonymity. De Beers is also considering reducing the number of sightholders, according to a Bloomberg report last week that Rapaport News could not corroborate.

“We will be communicating directly with customers in the coming months about the new sightholder contract period, which will focus on maximizing the considerable opportunities ahead in the diamond sector,” a De Beers spokesperson said. The company would not elaborate on the details.

The midstream’s accumulation of excess inventory contributed to a severe slowdown in the diamond market in 2019, with De Beers’ full-year sales falling 25% to $4.04 billion. Last July, Dutch bank ABN Amro wrote to its clients urging them to buy rough only when it’s profitable, and attacked the practice of making purchases purely to maintain supply allocations.

Sightholders are expecting this week’s De Beers sale — the first of the year — to be relatively large as the trade replenishes its stocks following a solid holiday season. De Beers raised prices in certain categories, sources said.

Soucre: Diamonds.net

De Beers Issues Synthetics Guidelines

De Beers has provided its rough-diamond clients and Forevermark partners with guidelines on how to operate in the lab-grown market if they wish to continue tapping into its branding.

The mining company, which in 2018 forayed into gem-quality synthetics with the launch of its Lightbox brand, is demanding businesses make full disclosure about their product, segregate synthetics from their natural supply, and do not make unproven claims about either category. The “Statement of Principles” outlines the legal structures companies with lab-grown diamond units must have if they wish to use the sightholder logo, as well as the procedures and training they are required to implement to avoid contamination or misleading marketing.

While De Beers already had rules mandating disclosure and other best practices, the new principles “ensure there is no room for doubt” about how clients may use the sightholder logo, explained David Johnson, head of strategic communications for De Beers. Some of the rules form part of De Beers’ contract with clients, allowing the miner to penalize those who flout them, while others are only recommendations.

“We believe the principles within the document set out a responsible approach, and that they are important for ensuring people can make clear and informed choices about what they are buying,” Johnson added.

The document refers to lab-grown diamonds as “artificial” products that “do not have the same inherent, naturally occurring characteristics or enduring value” as natural diamonds. The miner continues to define diamonds as a natural mineral in line with the International Organization for Standardization (ISO).

De Beers sent the guidelines to clients earlier this month, as numerous sightholders have launched lab-grown businesses under separate entities and trading names.
The following is a summary of the guidelines:

De Beers customers may only use the sightholder license — including displaying the sightholder logo — for business entities that are exclusively natural-diamond businesses. Entities with both natural and lab-grown activities may not use the logo.
The miner recommends setting up distinct and independent businesses for any lab-grown diamond activities, with separate systems, processes and workforces.
The rules prohibit “false, misleading or unsubstantiated” claims about the enduring value of lab-grown diamonds, whether directed at other businesses or at consumers. They cannot state or imply that lab-grown diamonds have the “identical inherent value characteristics” as natural diamonds.
Similarly, unproven claims about the environmental benefits or ethical advantage of lab-grown diamonds over natural ones are forbidden.
Sellers must provide the buyer with full and unambiguous disclosure before the transaction is complete.
They’re also required to ensure segregation at all stages of the supply process, such as storage, cutting and polishing, packaging, and transportation. Ideally, suppliers should handle natural and lab-grown stones in separate sites.
De Beers customers must “take steps” to ensure full disclosure and segregation further along the supply chain, down to the consumer.
Clients must have protocols to identify and mitigate contamination risks, and train staff members on the “operational, commercial and reputational impacts” of lab-grown diamonds.
Preferably, companies should disclose the countries in which the synthetic diamond was grown, polished and made into jewelry, as well as the identity of the grower. De Beers says businesses should “strive” to declare this, though it’s not an absolute requirement.
Grading language must contain words that make it clear a stone is lab-grown.
Customers must follow relevant laws, regulations and best practices, such as the standards that the US Federal Trade Commission (FTC) and the ISO have published.

Source: Diamonds.net

De Beers final diamond sale of the year gives some hope to depressed market

Rough uncut diamonds. Image by De Beers.

Anglo American’s De Beers, the world’s No.1 diamond miner by value, said on Wednesday that its last roughs sale of the year fetched $425 million, a slight improvement from the $400 million it obtained in the previous tender, but still over the year a whopping $1.4 billion less than in 2018.

The figure is also 20% lower than the $544 million worth of diamonds the miner sold in December last year, and it has brought the company’s total sales for 2019 to only $4 billion.

DIAMOND GIANT SALES TOTALLED $4 BILLION THIS YEAR, A WHOPPING $1.4 BILLION LESS THAN IN 2018

The diamond giant sells its stones ten times a year in Botswana’s capital, Gaborone. The buyers, or “sightholders,” usually accept the price and the quantities offered, but in the past months they’ve been given more decision making power, with De Beers allowing them to refuse about 50% of the stones contained in the parcels.

The company has also curbed plans to expand diamond production over the next two years and reduced prices for low-quality stones as much as 10%, in yet another sign of increasing volatility at the bottom end of the market.

Cheaper diamonds, which are often small and low quality, have been selling for significantly less now than six years ago due to an unforeseen oversupply that has weighed on prices and producers’ bottom lines.

The situation, some key actors say, is about to change, as the first signs of stabilization in the sector are starting to appear.

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Pressure has been piled on the industry by a supply glut of rough diamonds and competition from lab grown stones, while unrest in Hong Kong and the US-China trade dispute have knocked demand. — *Source Bain & Company.*

“Following continued polished diamond price stability in the lead up to the final sales cycle of the year, we saw further signs of steady demand for rough diamonds during Sight 10,” De Beers chief executive officer, Bruce Cleaver, said in the statement.

His perception is shared by Russian competitor Alrosa (MCX:ALRS), which last week said it had “evidence” that prices for a variety of diamond products edged higher in October and November. The world’s top diamond producer by output also noted that prospects for de-stocking were “more visible.”

Industry consultant Bain & Co., however, believes that while the glut that’s depressing the diamond market will probably be cleared early next year, it will take at least another 12 months for the market to fully recover.

“The industry’s first and strongest opportunity to rebalance and regain growth will be 2021,” said Bain in a report, adding that supply could fall 8% that year.

Source: mining.com

Brewing Diamond Industry Crisis Prompts De Beers to Cut Output

De Beers trimmed its production plans for this year as the world’s biggest diamond producer responds to a brewing industry crisis that’s hitting demand for its stones.

The Anglo American Plc unit will now mine about 31 million carats in 2019, at the bottom end of a previous forecast range. The company, once the monopoly supplier of diamonds, has a longstanding strategy to match supply with demand.

The diamond industry’s engine room, dominated by family-run businesses that cut, polish and trade the stones, is struggling to make money amid a flood of polished diamonds and stagnant consumer purchasing. That’s led to a slump in demand for the rough stones that De Beers mines from Botswana to Canada.

De Beers Diamond Sales Keep Dropping as Weak Patch Drags on

The weakness is showing up in the company’s sales, which are down about $500 million so far this year compared with 2018. The company has already gone unusually far in offering flexibility for its customers — allowing them to defer agreed purchases and lower the number of diamonds they plan to buy this year.

De Beers had already planned to produce a lot less diamonds than last year, when it dug up more than 35 million carats, the most since the global financial crisis. First-half output of the stones was 15.6 million carats, 11% lower than in 2018. The average selling price also fell 7%.

“Demand for rough diamonds remains subdued as a result of challenges in the midstream, with higher polished inventories, and caution due to macro-economic uncertainty, including the U.S.- China trade tensions,” Anglo said Thursday.

Macquarie Group Ltd. said before today’s announcement that it expects De Beers to post first-half profit of $567 million. While that’s down on last year, it’s performing far better than its smaller rivals, many of whom have seen their market values plummet to multi-year lows.

Source: bloomberg

De Beers Sales Slip to $440M

De Beers recorded its lowest-value sales cycle this year as weak Indian demand prompted it to drop prices of cheaper goods.

Proceeds fell to $440 million in November as the miner reduced prices by high-single-digit percentages for rough diamonds costing $100 per carat or less, sightholders said last week. The Indian manufacturing sector has struggled with thinning profit margins due to relatively high rough prices and the weak rupee, while tighter bank lending has further contributed to a decline in demand. November is also seasonally slow as factories close for the Diwali festival.

Proceeds from the ninth sales cycle fell 6% compared with the equivalent period a year ago, and were down 9% versus the $482 million it garnered in October, De Beers reported Tuesday.

“As the industry’s focus turns towards the key end-of-year retail selling season, rough-diamond sales continued to be in line with expectation during the ninth cycle of the year,” said De Beers CEO Bruce Cleaver. “While demand for smaller, lower-quality rough diamonds continues to see some challenges, the latest cycle saw some signs of improvement in this area as factories in India begin to reopen after Diwali.”

Rough-diamond sales came to $4.85 billion for the first nine cycles of the year, in line with a year ago, according to Rapaport calculations. The company offers its rough goods at 10 sales cycles across the year, mainly at sights in Gaborone, Botswana. Its sales figures also include auction proceeds.

Image: A De Beers sightholder examines a parcel of rough diamonds. (Kieran Doherty/De Beers)

Source: Diamonds.net

De Beers, Botswana Prep for New Sales Deal

Botswana once again finds itself at a crossroads. The sparsely populated, landlocked country is in a constant battle to ensure the longevity of its diamond industry.

Recognizing that diamond mining will not last forever, the government’s beneficiation program has sought to establish cutting and polishing, trading, and auxiliary services in an effort to diversify its industry — and economy — away from its reliance on the mining sector.

Beyond mining

De Beers, which counts around 59% of its production by value in Botswana, has played no small part in that effort. It did so initially by earmarking a part of its rough supply to be manufactured in Botswana, and today there are 18 sightholders with factories in the country. In 2013, De Beers moved its sales headquarters to Gaborone, meaning that its 10 annual sights were taken out of London, thus diverting traffic and diamond-related activity to the African city.

Furthermore, the establishment of the parastatal Okavango Diamond Company that same year gave the government access to 15% of production by Debswana, its joint mining venture with De Beers. That was the first time substantial rough sales from Debswana took place outside of the De Beers system.

The 2011 agreement that governed those developments is up for renewal in 2020, and negotiations are expected to begin in the coming year. For its part, the government is seeking to increase supply to local sightholders as a means of creating more jobs, newly elected President Mokgweetsi Masisi told Bloomberg in May.

Some question whether Botswana can handle more manufacturing, given that a few factories have closed in recent years. If profitability remains the biggest challenge facing manufacturers, Gaborone has yet to prove itself as a viable center for high-volume cutting. Perhaps De Beers can play a further role there, too.

The government will also likely want to increase the percentage of Debswana supply that Okavango receives. And it might want to renegotiate greater access to the large and high-value diamonds Debswana recovers.

Digging deep

Botswana has some leverage in the relationship with De Beers. It owns a 15% stake in the group, with Anglo American holding the remaining 85%. And the two are equal partners in Debswana and in DTC Botswana, which sorts and mixes production for De Beers and Okavango.

De Beers, meanwhile, brings to the table its mining expertise and budget. In 2010, it committed to investing $3 billion over 15 years in the Cut-8 expansion of the Jwaneng mine — considered the world’s most valuable diamond-producing asset.

That project is already the main source of ore at Jwaneng and is expected to extend the life of mine to 2030 and by some 93 million carats. Studies for the viability of Cut-9 are under way, which would further extend the life of Jwaneng. A final investment decision on the project is expected later this year, reports a De Beers spokesperson.

De Beers could use the potential Cut-9 investment, as well as funding extensions at the Orapa and Letlhakane mines, as a bargaining tool in negotiations with the government.

African investments

De Beers walks a similarly fine line in other African countries where it operates.

In South Africa, it may have to reduce ownership of its local businesses from 74% to 70% under the new mining charter, as the government wants to see more local black economic empowerment (BEE) involvement. That said, De Beers is engaged in a $2 billion project to develop underground mining at the Venetia asset. From next year, Venetia will be its only mine in South Africa, as it plans to close the Voorspoed mine. It has already sold the Finsch, Cullinan and Kimberley operations over the past decade.

Meanwhile, in May 2016, De Beers signed a 10-year sales agreement with Namibia, in which it ceded 15% of local supply to the government and promised more diamonds to local cutters. The company subsequently announced major investments in its marine mining operations off the Namibian coast.

It’s that give-and-take that Masisi is hoping will result in a “win-win” for both parties as they negotiate their next long-term deal — especially given that so much of Botswana’s future diamond production depends on Jwaneng’s expansion.

“We have had a wonderful relationship with De Beers, and we expect that relationship to be even more cemented,” the president told Bloomberg in May. “The returns [from the Jwaneng development] are going to be realized in the period of the next deal. This is a marriage we’re after.”

This article was first published in the July issue of Rapaport Magazine.

De Beers to Sell Diamonds from Artisanal Miners

De Beers announced plans to work with artisanal miners in Sierra Leone to ensure their diamonds are ethically sourced and sold at a fair price on its auction platform.

The company has partnered with the Diamond Development Initiative (DDI) on the project, known as GemFair, which is set to launch a pre-pilot phase this month. GemFair will provide tracking technology to artisanal and small-scale miners (ASM), aiming to create a secure and transparent route to market for their diamonds, De Beers said in a statement last week.

“The ASM sector represents a critical income source for many poverty-affected communities,” said De Beers CEO Bruce Cleaver. “However, due to parts of the sector being largely informal and unregulated, it lacks access to established international markets and the ability to derive fair value for participants.”

De Beers hopes the new project will help grow acceptance and prospects for artisanal miners, in addition to creating a new supply source for the company, Cleaver added.

Miners who want to participate in the program need to receive certification from the DDI as well as from GemFair. Participants will then be given a diamond “toolkit,” which includes technology enabling them to digitally track all stones throughout the supply chain.

Once the initiative is operational, GemFair will begin buying stones from participating miners, which will then be sold via De Beers’ Auction Sales channel.

De Beers has not set a date for the pilot’s completion, but hopes to make the first purchase later this year.

Source: Diamonds.net

Rosy Blue to Buy Stake in Leo Schachter

Polished manufacturer Rosy Blue has agreed to acquire a minority share in Leo Schachter, as the diamond suppliers seek to make their operations more efficient.

The deal will enable the firms to use each other’s infrastructure around the world, providing better value for their clients, Leo Schachter said in a statement Monday. Leo Schachter will still operate independently under the Schachter family’s majority ownership, led by its current management team, it noted.

The firms expect the transaction to close soon, but did not disclose other terms of the agreement.

“The relationship and collaboration which we have enjoyed with the Rosy Blue family for over two generations will produce a unique and innovative platform for the demands of today’s diamond industry,” said Elliot Tannenbaum, principal at Leo Schachter.

The companies have been working together for more than 30 years, Leo Schachter noted. They both receive rough supply from De Beers, as sightholders, and from Alrosa’s contract-sales business, and have offices in all major industry hubs.

Source: Diamonds.net