Mmegi

De Beers’ sales sink to Covid era lows

- MBONGENI MGUNI Staff Writer

De Beers’ latest sale of rough diamonds, held in Gaborone, netted a provisiona­l $80 million, the lowest amount since April 2020 when demand and prices crashed due to COVID-19.

De Beers sells 90% of its production by value to an exclusive list of contract buyers known as sightholde­rs, who are offered stones at 10 sales events or ‘sights’ held in Gaborone each year.

“Macro-economic challenges continue to affect the diamond sector,” De Beers CEO, Al Cook said on Wednesday in announcing the latest sales results.

The troubles in diamonds this year have largely been caused by high inventory levels of polished stones in the midstream, that section of the diamond pipeline occupied by cutters and polishers, who buy from mines and sell to jewellers. Last year’s extraordin­ary post-Covid rebound for diamonds increased supply into the midstream, which this year has met global economic uncertaint­ies, a softer-than-expected performanc­e from China, the industry’s reputation­al knock from the continued flow of sanctioned Russian diamonds into the market as well as stiffer competitio­n from synthetics, resulting in the midstream glut.

The fall to a three-year low in rough diamond sales came after De Beers last month offered its sightholde­rs full flexibilit­y for the November and December sights. Sightholde­rs, who comprise diamond cutting and polishing firms, are under contract with De Beers to make offers for and purchase the diamonds produced by the group throughout the year.

Fulfilling that obligation has grown more difficult this year, as demand and retail prices for the precious stones continue to fall to levels last seen in 2019.

Analysts previously told BusinessWe­ek that “full flexibilit­y” could mean sightholde­rs do not take up any stones at the sights remaining in the year.

Cook said the two-month import moratorium imposed by Indian diamond cutting and polishing firms in September as a response to the market’s high diamond inventorie­s, together with the slow retail recovery in China, meant De Beers had to continue with reduced diamond availabili­ty in the recent sales event.

“De Beers maintained support for its sightholde­rs with full purchase flexibilit­y as the midstream re-establishe­s an equilibriu­m between wholesale supply and demand,” the CEO said.

Meanwhile, figures provided by diamond industry researcher, Edahn Golan, underline the state of the rough diamond industry this year and producers such as De Beers.

According to Golan’s figures, De Beers’ sales are 40% down in terms of value in the year to date, compared to a 20% increase year-onyear in 2022.

De Beers’ performanc­e thus far this year is trailing 2019 sales by four percent, Golan said. The year 2019 represents the pre-pandemic period.

“The drop (this year) follows two years of exceptiona­l consumer demand that is now waning,” the researcher said in a note shared on Wednesday.

Meanwhile, the provisiona­l sales figure for $80 million in the recent auction represents an 82% year-onyear drop.

 ?? ?? Under pressure: Jwaneng Mine is amongst the most productive in the De Beers group
Under pressure: Jwaneng Mine is amongst the most productive in the De Beers group

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