Don’t Ban Rough Buying, De Beers Urges

Bruce Cleaver

De Beers CEO Bruce Cleaver has called on the trade to allow rough purchases, assuring manufacturers the company won’t require them to buy in the weak market.

“We will only sell [rough] when the demand is such that it can create sustainable value for all of us,” the executive wrote in a blog post Friday. “However, just as we are not compelling our clients to purchase, we strongly believe it is counterproductive for any part of the industry to compel them not to purchase.”

Cleaver’s plea comes after the Gem & Jewellery Export Promotion Council (GJEPC) and other Indian trade organizations called on the nation’s diamond sector to pause rough-diamond imports for 30 days, beginning on May 15. The move would improve the Indian industry’s liquidity situation and deplete inflated polished inventories, the trade bodies explained.

Without explicitly referencing the Indian trade groups’ appeal to their members, Cleaver argued that supply had already been significantly reduced after De Beers suspended production at most of its mines. “Almost all other diamond producers have halted or significantly reduced supply, with some mines unlikely to return to production,” he added. De Beers cut its production guidance for 2020 to 25 million to 27 million carats, more than 20% below its initial projection, Cleaver noted.

The company also canceled its March sight and is offering 100% deferrals at sight 4, which begins Monday. Sightholders are likely to defer the vast majority of purchases to later in the year, as weak consumer demand and the shutdown of India’s cutting industry have diminished appetite for rough.

On Friday, India extended its nationwide lockdown by two weeks, raising the question of when diamond manufacturing would revert to normal, especially in the city of Surat, which produces more than 90% of the world’s polished goods.

Marketing message

Meanwhile, Cleaver urged the industry to capitalize on the diamond’s symbolism, as consumers will seek to purchase “fewer, but more meaningful things” as they move out of lockdown. Signs of pent-up demand from delayed weddings, and self-purchases to reward hardships that have been overcome, are starting to show in China as the lockdown there has eased, the CEO commented. People are visiting stores and shopping malls again, he said.

In its communication with consumers over the coming months, De Beers will emphasize the role diamonds play in shaping a better world and in forging meaningful connections, he stressed.

“Just as they have had to find innovative ways to stay connected with loved ones, we will find new ways to connect with them,” he said.

“Throughout time, the diamond has served as a powerful symbol of connection and meaning,” he wrote. “It has always been attached to life’s most precious moments and relationships and represented a store of value, but increasingly we believe a diamond is becoming a store of values.”


De Grisogono Files for Bankruptcy Amid Probe

A De Grisogono store on New Bond Street in London

De Grisogono has filed for bankruptcy shortly after being caught up in an alleged money-laundering scandal involving the daughter of Angola’s former president and her husband.

Last week, media reports stated Isabel dos Santos’s husband, Sindika Dokolo, bought a stake in the Swiss luxury jeweler together with Angolan national diamond-trading company Sodiam through a Malta-based shell company. Over $150 million in Angolan money was invested in De Grisogono, Bloomberg reported.

The jeweler has now filed for creditor protection following failed talks to find a buyer over the last few months. If protection is granted, De Grisogono will implement a “mass redundancy procedure” in which all 65 employees at the Swiss office will be dismissed, the jeweler said Wednesday.

“Without financial support from the current shareholders, and without a new investor, unfortunately the company cannot continue as a going concern,” De Grisogono continued.

On January 22, Angola’s prosecutor general launched an investigation into dos Santos, while an Angolan court froze local assets belonging to her and her husband. Prosecutors alleged they were complicit in illegal transactions in Angola that cost the government $1.14 billion, the Bloomberg report explained.

Dos Santos said the news stories about her were part of a political witch hunt to discredit her, and she insisted her fortune was self-made.

Rumors concerning the jeweler’s connection to dos Santos had been circulating on social media since October 2017. The Instagram account @degrisogononews was specifically set up to bring attention to the questionable diamond-trading practices attributed to dos Santos and her husband.

Following the so-called Luanda Leaks reported by The New York Times and other international publications, gemstone dealer and explorer Yianni Melas revealed he was the Instagram account owner on January 20.

Melas went on a 31-day hunger strike in November and December 2017 to protest the sale of The Art of De Grisogono, Creation I at Christie’s Geneva. The necklace featured a 163.41-carat, D-flawless center diamond sourced in Angola.

On the news of the Swiss house going into bankruptcy, Melas told Rapaport News, “[During my hunger strike,] there is a photograph of me with my hands up in the air at the Acropolis because I knew that one day this would happen.”

“I feel mixed emotion, sadness about how an amazing brand associated with beautiful jewels would lose its name, but at the same time the overwhelming feeling is that I am happy because it belonged to somebody who didn’t deserve it. And also it’s a lesson to anyone who is involved with brands which are not good that initially it appears great and beautiful but in the end justice prevails,” Melas added.