Hong Kong Jewellery Magazine takes an in-depth look at the adjustments the diamond industry is, or should be, implementing in order to accommodate the changing economy and consumption habits in an environment where the diamond industry "at large is under the gloom of the stagnant economy that impedes buying sentiments in end consumers." With the assistance of three industry insiders - Erik Jens, head of the diamond and jewelry division at ABN AMRO Bank, Nissan Perla, founder of Olympic Diamond and the Diamond Registry, and Lawrence Ma, chairman of the Diamond Federation of Hong Kon
Firestone Diamonds plc said that it has been informed by Tango Mining Limited that it has not been able to meet the conditions of the conditional sale agreement (CSA) by the September 9 Revised Drop Dead Date for the disposal of the company's Botswana operations to Tango Mining. Accordingly, the CSA has lapsed and the disposal will not proceed.
In his latest installment, diamond industry analyst Ehud Arye Laniado looks for a plausible answer to the following question: if consumer demand for polished diamonds is not rising, and inventory of said stones is not decreasing, what explains the currently strong - even "hot" - demand for rough diamonds? To give an example: "During De Beers’ Sight last week, the company raised prices by 2-4% on average, according to traders. Sightholders that chose to sell rough diamonds from the Sight reportedly sold them for higher premiums.
Diamcor Mining Inc. says it has raised C$5.82 million (US$4.48 million) from investors, with more than 90% of the units offered being acquired by institutional investors. The shares and warrants in the units offered must be held until January 1, 2017 before they can be sold. Proceeds from the Offering will be used for the acquisition of additional operational equipment and materials to support the continued advancement of the Company’s Krone-Endora at Venetia Project, and for general and administrative purposes.
After years of discussion between the Antwerp diamond industry and the Belgian Government, in 2015 it was decided to introduce the “Diamond Regime” tax system, pending European Commission approval. Today the EC announced that the fiscal regime does not constitute State aid, and gave the green light to what has come to be known as the "Carat Tax". Implementation of this new tax regime will put an end to complex discussions between the Antwerp diamond industry and tax authorities on the control and valuation of diamond traders' stock.
The share of the domestic Russian market in the revenue of Alrosa from the sale of rough diamonds rose to 11.3% in Q2 2016 from 7.5% in Q1 and 9.4% in Q2 of last year. Alrosa said in a report based on International Financial Reporting Standards (IFRS) that in absolute terms the volume of rough diamond supplies to the domestic market amounted to 8.8 billion rubles – up 20.7% from Q1 2016 and 80% on Q2 2015 it rose 80%, Interfax reported.
Diamcor Mining Inc. is nearing the completion of a brokered private placement financing deal that will help it raise C$5 million to be used for the acquisition of additional operational equipment and materials to support the continued advancement of its Krone-Endora at Venetia Project in South Africa. The cash raised will also be used for general and administrative purposes, the miner said in a statement.
The Israel Diamond Exchange (IDE) pledged to fight a decision by the First International Bank of Israel (FIBI) to tighten its lending standards for the trade. FIBI raised collateral requirements for diamond industry members, leading IDE President Yoram Dvash to write to bourse members, vowing to lobby state authorities and persuade the bank to reconsider the decision. Dvash claimed FIBI’s demands are stricter than those applicable to other sectors and alleged the move was influenced by “pressure” from Israel’s financial regulator, Rapaport reported.
Two economists have urged Botswana to undergo a second economic transformation. In a report compiled by Econsult Botswana, economists Dr Keith Jefferies and Sethunya Sejoe warned that diamond mining is unlikely to drive economic growth in future, but rather a foundation for current economic activity and income levels. “Second, as mines get deeper and more difficult to exploit, costs of production go up and hence profits – and the sector’s contribution to GDP and government revenues – will gradually decline,” they said.
South African diamond producer Trans Hex Group Ltd. said a group of companies holding more than 72 percent of its shares have made a mandatory cash offer to acquire the South African diamond producer. Cream Magenta 140 Proprietary Ltd., Metcap 14 Proprietary Ltd. and RAC Investment Holdings Proprietary Ltd. “have come into concert and have made a mandatory cash offer,” Trans Hex said in a statement to the Johannesburg Stock Exchange where it is traded. The offer follows an acquisition of 47 percent of ordinary shares in the company by Cream Magenta and Metcap.
Almost 500 North American jewelry businesses discontinued operations in the second quarter of this year, according to the Jewelers Board of Trade (JBT). The figure is a 66 percent increase on the number JBT recorded in the second quarter of 2015, and provides a strong signal that the industry’s consolidation is continuing. A total of 475 number businesses discontinued operations in the United States and Canada together, with 460 of them being in the United States.
Diamond industry analyst Paul Zimnisky believes it is very unlikely that De Beers Canada will be able to find a buyer for its Snap Lake mine before the company floods it later this year. He said the main reasons were groundwater problems, lower diamond prices and a reduced number of diamond producers. "I don't see somebody buying it and turning it back on and producing at current prices," he told Canada's CBCNews. According to his data, rough diamond prices are only up about five percent since De Beers ended production at the mine last December.
Firestone Diamonds plc has agreed to extend the date by when all conditions for the disposal of the company's Botswana operations to Tango Mining Limited must be completed. The company last year entered into a conditional sale agreement for the BK11 operation with Tango Mining for $8 million and, twice since then, certain terms of the agreement were amended. The sides have now agreed that it must be satisfied by no later than August 29.
We at ABN AMRO support initiatives that create more insight into the value chain, its key players, engages with the right side of the market and excludes areas which show less transparency or no willingness to learn and improve. We see other banks doing the same more and more. In the end there will only be credit lines available for companies with good corporate standards and track record, whether they are small or big doesn't matter ... We expect more consolidation and certain companies going out of business.
In a major, even historic development, the United States will be guaranteeing loans to diamond manufacturers in Botswana. Overseas Private Investment Corporation (OPIC), the U.S. Government's development finance institution that, "mobilizes private capital to help solve critical development challenges and in doing so, advances U.S. foreign policy", has today issued a press release announcing a financial partnership to provide access to credit for Botswana’s diamond cutting and polishing industry.
As announced previously, the Russian government has sold a stake in Alrosa, the world’s largest diamond producer, generating $818 million to help close the country's growing budget deficits.
Canada's Stornoway Diamond Corp. has announced that 91,912,732 common share purchase warrants were exercised at a price of $0.69 (C$0.90) per share for total proceeds to the Corporation of $63 million (C$82.72) million. This represents 97.47% of the warrants issued on July 8, 2014. President and CEO Matt Manson commented, “We are grateful for this expression of confidence by our warrant holders. The funds received from this exercise will be used to complete the construction of the Renard Project ahead of drawing upon our committed C$100 ($76.75) million senior loan facility.
The Russian government has priced the share placement of state-controlled diamond miner diamond producer Alrosa at 65 roubles ($1.02) per share; its sale of a 10.9% stake raised almost $820 million, a source close to the placement told Reuters. The pricing represents a discount of 3.8 percent to the closing price on Friday. The Russian Direct Investment Fund (RDIF) and its co-investors, including sovereign funds in the Middle East and Asia, have bought about half of the shares in Alrosa, a source familiar with the process said.
Russia on Wednesday launched the sale of a stake in diamond producer Alrosa as part of a privatisation programme to help to bolster government finances which have been hit by weak oil prices, writes Reuters. Russia, trying to keep its budget deficit within 3 percent of gross domestic product, is also planning to sell stakes in other companies, including Rosneft and Bashneft and VTB Bank. Alrosa said the process to sell 10.9 percent of its ordinary shares owned by the government had been launched.
Gemfields has announced the finalization of four debt financing facilities for a total of $65 million, which are intended to provide financing for expansion plans to increase its ruby and emerald production. The loans entail a $45 million facility for the ruby operations, Montepuez Ruby Mining Lda, of which Gemfields owns 75%.
Diamond traders of Mahidhapura and Varachha diamond markets have taken a unanimous decision to expose defaulters active in the industry and to sever business links with those who have defaulted in the last one-and-a-half-year, writes Times of India. Traders held a meeting with Surat Diamond Association (SDA) on Sunday to discuss this move. The traders also decided to close safe deposit vaults at 7:30 pm, curbing the use of promissory notes and discouraging credit transactions.
The Telegraph writes, "Uncertainty caused by Brexit has not put off Lucapa Diamonds from sounding out investors about a listing on Aim in London.
The 100-year-old Indian diamond house and one of the largest in the trade, Shrenuj & Co., has run into trouble as lenders tighten their grip on the group which has survived across four generations, reported The Economic Times last week. Banks - including Bank of India and ICICI - with a combined exposure of around $450 million, have obtained a court order to repossess the company's diamond inventory and restrict the promoters' travel.
Rapaport News' Avi Krawitz interviewed recently appointed president of the Jewelers Board of Trade (JBT) Tony Capuano, who discussed the health of the U.S. jewelry market, bank lending, Millennials and the JBT itself. Capuano noted the continuing trend toward consolidation and declining numbers of retailers in the U.S. jewelry market. "The industry continues to contract and consolidate. There are still 29,000 jewelry companies across the U.S., of which about 21,000 are retailers. Our data shows 700 retailers left the industry in the 12 months to the end of the first quarter.
The privatization of Russian diamond mining giant Alrosa is planned for July, reports Reuters.
Diamond industry veteran and chairman of one of - if not the - world's leading diamond companies for solitaires (single-stone rings), Venus Jewel, Sevanti bhai Shah paid a visit today to the Kring in Antwerp, the world's only dedicated rough diamond bourse, where he spoke to a crowd of nearly 200 diamantaires.
The U.S. consumer price index (CPI) for jewelry jumped by 3.3 percent in May from April, according to seasonally unadjusted data from the U.S. Bureau of Labor Statistics and soared 9.9 percent from a year earlier, according to Rapaport News. However, the sharp increase was not in line with diamond prices for the month, with Rapaport's diamond index showing that prices of 1-carat, GIA-graded diamonds were flat, while prices of 0.30-carat diamonds fell 1.1 percent and 0.50-carat diamonds slipped 0.3 percent during May.
Luk Fook warns that its profit for the past fiscal year which ended on March 31 is likely to drop by 35 to 45 percent as a result of reduced spending by tourists from mainland China. The strength of the Hong Kong dollar against China's renminbi is also putting Chinese visitors off buying, along with an economic slowdown in the mainland and a rise in the popularity of other tourist destinations.
ALROSA has agreed on the postponement of the payment of a $720 million loan from 2017 to 2019 with JSC Alfa-Bank. The Russian mining giant's repayment schedule for debt on loans and borrowing of $2.69 billion will be $370 million in 2017, $600 million in 2018, $720 million in 2019, and $1billion in 2020, the miner said in a statement.
JCK's Rob Bates reports that Standard Chartered Bank, one of the industry’s largest lenders with a reported $2 billion portfolio, is shutting its diamond and jewelry business, dealing yet another blow to diamond trade financing. “When we announced our new strategy, we said that we would look to exit businesses that were nonperforming or that did not meet our new risk profile, with all of our business segments subject to review,” said a Standard Chartered spokesperson.
Dominion Diamond Corporation reported a loss of $1.0 million for its first fiscal quarter of 2017 (February through April 2016) compared with a profit of $12 million in the year-earlier quarter. Both measures were impacted by a lower value product mix at Ekati prior to the initial sale of diamonds recovered from Misery Main later in the fiscal year. Inventory impairment, or reduced value of the stock, in the amount of $19.6 million was recorded on available for sale inventory at the Ekati mine.
Representatives of major law enforcement organizations and other groups from around the world, including the Federal Bureau of Investigation (FBI), Europol, Interpol, the Netherlands police, the U.S. State Dept., and the World Customs Organization, will be gathering in The Hague from June 28 to 29 for a two-day meeting on the role diamonds might play in money laundering and terrorist financing.
China said its economy grew by 6.7% in the first three months of 2016, while India reported a remarkable 7.9% expansion for the same period. But how accurate are the figures, CNN asks. Both countries have been subject to persistent doubts over the quality of their data, leading scores of reputable economists to cast aside official measures and turn to alternative gauges instead. The issue is critical because the two countries account for 16% of world GDP, or about $13 trillion. And they are the two most critical diamond markets after the United States.
Over a dozen diamond traders in Surat, Mumbai and elsewhere have reportedly lost a combined $7.5 million following a default by an Indian dealer. Market sources said that the defaulter had an office at the Bharat Diamond Bourse in Mumbai and bought light-brown colored diamonds from traders in Surat and Mumbai for sale abroad, according to a report in The Times of India. He had been trading for many years and therefore enjoyed 120 days credit from suppliers in Surat and Mumbai.
Stornoway Diamond Corporation reports that overall construction progress at its Renard Diamond Project stands at 96% compared to the recently re-baselined plan of 90% and the initial plan of 82%; the first diamond production is expected to take place later this year. As of the end of May, all major equipment and control systems had been installed in the project’s diamond process plant, primary crusher and processed kimberlite load-out facility. The project’s power plant, water treatment facility and maintenance facilities are fully operational.
In promising economic news, US consumer spending rose at the fastest rate in nearly seven years in April, indicating stronger economic growth after a slow start to the year. Personal spending was up 1.0% in April from a month earlier, the Commerce Department said, the largest one-month jump since August 2009. Household spending accounts for more than two-thirds of economic output in the U.S. and has been a driving force for the expansion for more than five years. But consumers had been steadily pulling back since mid-2015.
Sales at U.S. specialty jewelry stores rose 3 percent on the year to $2.12 billion in March, according to the latest data from the U.S. Census Bureau. The growth at specialty stores was slower than for the sector as a whole, as jewelry and watch sales across all channels increased by 4.2 percent to $4.65 billion in March, according to Rapaport News.
The World Federation of Diamond Bourses unanimously elected Ernie Blom for a third consecutive two-year term as president during the recent World Diamond Congress in Dubai, while Israel Diamond Exchange president Yoram Dvash was elected as vice president, reports The Retail Jeweller - India. Blom said he was delighted with the debates and decisions taken at the biennial meeting of the WFDB and International Diamond Manufacturers Association (IDMA).
The diamond mining giant is arranging investor meetings in the United States and the United Kingdom next month in preparation for the government's sale of a 10.9% stake in the firm, a Sberbank executive said on Friday. The Russian government aims to bank more than $900 million from the sale on the Moscow Stock Exchange later this year, Reuters reported.
Russian diamond mining giant ALROSA announced that it today (Thursday) repaid a $350 million bank loan to JSC Alfa-Bank which it received in May 2014. ALROSA paid back the bank loan with its own cash funds, thus reducing its debt on loans and borrowings to $2.7 billion. ALROSA has made it a priority in recent years to cut down its outstanding loans.