Russian diamond miner Alrosa will allow its long-term contracted clients to defer !00% of their April supply to later this year, a spokesperson has told us. "The spread of coronavirus and counter-pandemic measures implemented around the globe have severely affected the diamond industry. With this in mind, Alrosa supports its long-term clients with a full flexibility for the April 2020 trading session, lifting mandatory buyout requirements."
At meetings in Botswana coinciding with its second rough diamond 'sight' of 2020, De Beers detailed to clients its plans to scrap the one-size-fits-all supply model and create three different types of contract: manufacturer contracts, dealer contracts and integrated retailer contracts, a company representative explained to us. Each type of contract is said to be designed around the broad needs of the three types of business model to which they apply. The move is designed to help the diamond miner ensure that each buyer gets the stones most suited to its needs and business type.
De Beers might "significantly reduce" its number of sightholders and could be introducing changes to the way it allocates and sells its rough diamonds, according to Thomas Biesheuvel of Bloomberg. The miner's current six-year contract with buyers expires at the end of 2020.
According to the latest reporting by Thomas Biesheuvel at Bloomberg, at Sight 8 (23 Sept. - 27 Sept.) De Beers has once again offered several options to increase the flexibility of buyers struggling with an industry-wide slump caused mainly by an oversupply polished stones in the diamond 'pipeline'.
De Beers today announced that its sales of rough diamonds at its sixth 'sight' of the year in July earned a total of $250 million, a 53% decline from the $533 million sold in July 2018. It is the smallest amount earned from a sale since December 2015, as the miner gave its clients the opportunity to buy fewer goods without repercussion - an uncommon though not unprecedented move. De Beers CEO Bruce Cleaver says this flexibility is part of their effort to work with its clients to help them ride out the storm currently raging in the rough diamond market.
Russian diamond mining giant Alrosa expanded the long-term customer list for the three-year contract period 2018-2020, and has added two Belgian companies to its ALROSA ALLIANCE. Participants in the ALLIANCE obtain the right to use the logo that confirms not only regular rough diamond supplies from ALROSA, but also the reputation of a client as a reliable and trusted participant of the world diamond complex. Becoming an ALROSA ALLIANCE participant makes the company a candidate to potentially sign a long-term agreement.
De Beers reversed a four-month trend of declining rough diamond sales at the final sight of 2018, as the miner sold $540 million of rough goods in its December cycle. The company attributed the increase in sales to the restarting of Indian manufacturing units after the Diwali holiday, when factories close for several weeks, and the spike in demand precipitated by the crucial holiday season and in anticipation of the need for replenished stocks in January.
Rough diamond demand remained strong at De Beers June sight, as the mining giant provisionally sold $575 million of rough diamonds for the fifth sales cycle of 2018 (Global Sightholder Sales and Auction Sales), its second largest take in 2018. Earnings from this sale represent a 6% increase over the same cycle in 2017 and a 3% increase over the $560 million sold in its fifth cycle of 2016.
De Beers has reportedly dropped Gitanjali Gems from its list of sightholders (long-term contracted buyers) following the alleged involvement of Gitanjali owner and managing director Mehul Choksi in a $1.77 billion fraud at Punjab National Bank (PNB), together with his billionaire nephew Nirav Modi. In an article published in the Times of India (TOI) on February 22, 2018, De Beers group clarified that the company would not do business with firms not complying with financial propriety and industry reputation issues.
Russian diamond miner ALROSA held an annual meeting with its long-term clients in Antwerp on February 7. It was the first meeting of the new three-year client period, which started in January 2018, and the choice of Antwerp as its setting was a logical one, as the majority of ALROSA's long-term clients are based in the diamond capital, and about half of the miner's entire business - some $2 billion per year - is conducted in Antwerp.
Russia mining giant ALROSA recently confirmed the company’s Sales Policy Concept for 2018-2020 as the new contract period approaches; long-term contracts for the sale of rough diamonds with large trading, cutting and jewelry companies for up to three years will remain the cornerstone of ALROSA’s sales, though some changes have been introduced. Namely, ALROSA is planning to switch over to annual mutual approval of the volume and assortment within three-year contracts.
The lastest disruptive online diamond sales platform, a "reverse auction site" startup called Legemdary, purports to serve the interests of diamond buyers and wholesalers by cutting out retailers altogether, writes Rachelle Bergstein for Forbes, introducing the company to a global audience. Legemdary calls itself the only straight to wholesale online diamond marketplace, connecting prospective engagement ring buyers directly with wholesalers who bid to supply the consumers' needs.
De Beers Group today announced the value of rough diamond sales (Global Sightholder Sales and Auction Sales) for the fourth sales cycle of 2017, provisionally valued at $520 million. The fact that sales remain solid as the summer slowdown looms indicates continuaing upbeat sentiment in the manufacturing sector, spurring demand. Cycle 4 sales were down 11% from the revised figure of $586 million sold at the last sight (contract sales session) and slipped 18% from the fourth cycle a year ago.
Sergey Ivanov, the President of ALROSA, participated in the extraordinary business meeting with the company’s long-term clients dedicated to the new contract period, the company writes in a press release. Participants of the meeting from more than 70 Russian and foreign companies had a chance to discuss with ALROSA’s management diamond market trends, the existing market environment, plans for the near future, and the company’s sales structure. A new 3-year contract period 2018-2020 is to start next year.
JCK's Rob Bates reports that De Beers is introducing a significant change to the 'take it or leave it' policy of its traditional sight system, as they will be, "experimenting with offering sightholders boxes made to order for their needs. Traditionally," writes Bates, "De Beers has separated its product into 120 standard assortments. And while that continues, it is also working with certain clients to create tailored mixes." He then explains that, "This represents a significant break from how things have generally worked in the century-old sight system.
The De Beers Group of Companies today announced the value of rough diamond sales (Global Sightholder Sales and Auction Sales) for the eighth sales cycle of 2016, with the provisional sales figure coming in at $485 million. This represents a 24% decline from the $639 million sold in cycle 7.
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.
In an in-depth analysis, Rapaport's Avi Krawitz maps who is buying rough from the four main diamond producers, De Beers, Alrosa, Rio Tinto and Dominion Diamonds, combined accounting for an estimated 60% of global rough supply.
Will the diamond industry see more of the same with the appointment of Bruce Cleaver as the new CEO of De Beers following the departure of Philippe Mellier, asks Charles Wyndham in his latest commentary on polishedprices.com. Mellier succeeded in 2014 when De Beers was the only division of Anglo American that met the mother-company's target of a 15% return on capital employed. "The only problem was that reaching that target nearly wiped out the whole industry, a sort of wonderful coup de grace.
Rob Bates of JCK writes that De Beers sightholders are likely to be relieved by the appointment of Bruce Cleaver to replace Phillippe Mellier as CEO, noting that he is already "striking a different tone than his predecessor." Bates summarizes Mellier's tumultuous five-year tenure, during which, "Oppenheimer’s family sold its shares to Anglo American, De Beers transferred sales to Botswana, the company settled its U.S. antitrust issues, and it decided to move from its longtime home on Charterhouse Street.
De Beers has officially announced the value of rough diamond sales (Global Sightholder Sales and Auction Sales) for the fourth sales cycle (sight) of 2016 at a provisional $630 million, while the third sales cycle figure was $666 million. The fourth sales cycle took place last week. In the first four months of this year De Beers sold more than $2.4 billion of rough goods as demand for manufacturers has soared.
Botswana’s Central Statistics Office (CSO) reported that diamond mining production slumped by 33% during the third quarter of last year due to mines that were closed in response to falling rough diamond prices on world markets. Debswana, jointly owned by De Beers and the Botswana government which mines the vast majority of the country's diamonds, reduced output level at Orapa Plant 1 and also closed the Damtshaa mine.
The De Beers Group has officially announced the value of rough diamond sales (Global Sightholder Sales and Auction Sales) for the third sales cycle (sight) of 2016 at a provisional $660 million, while the second sight figure was $617 million. The third sales cycle took place last week. In the first three months of this year De Beers has sold $1.8 billion of rough goods as demand has surged.
Charles Wyndham wonders about the sense of jewelry retailers in Antwerp, London, New York and many other places offering huge discounts which makes the products, touted as the ultimate luxury goods, "look exceedingly grubby". "I have never understood why so many, if not the vast majority, of retailers selling diamond jewelry insist on stuffing their windows as if it were a butchers shop. Just as the industry itself has in essence changed so little over the past however long, so retailing of diamonds has hardly progressed, and indeed in many ways regressed."
ALROSA sold about $780 million worth of rough diamonds during its first two sales of the year as demand for rough improved, a market source told Rapaport News. Prices in February were unchanged for the sixth month running, according to Rapaport records. The report follows a De Beers announcement on Tuesday that it sold $1.155 billion of rough stones in the first two months of this year.
Despite the extreme challenges presented by a ‘perfect storm’ of problems during 2015 which presented a variety of challenges for the sector as a number of unexpected issues came to pass at the same time which led to a situation of "inventory indigestion", it was encouraging to see how swiftly and decisively the diamond industry was able to respond and positive results are already being seen, De Beers CEO Philippe Mellier said in a bankers' briefing delivered in Mumbai.
Diamond industry veteran Ehud Laniado said he and other market players expected the strong demand seen in January for rough diamonds to fizzle out before February, but instead the increase in demand has been sustained. He says current market conditions are characterized ongoing strong demand from De Beers’ Sightholders, with the second Sight of the year, opening today (Monday), expected to be similar in size to the January Sight, at around $500 million.
Diamond specialist Ehud Arye Laniado takes an informative look at the options for purchasing and selling rough diamonds, explaining the advantages and disadvantages of each. "Manufacturers essentially have two alternatives when it comes to buying rough diamonds. They can either buy directly from mining companies, or they can buy from others companies in the secondary trading market." Mining companies (producers) sell their diamonds either through a "sight" system or through tenders and auctions.
The unexpectedly sharp rise in rough prices and demand for goods in January, with De Beers and ALROSA together selling around $1 billion of goods and seeing demand for much more, got Charles Wyndham around to thinking about the sight system and how the industry's sales methods could be changed.
Diamond industry analyst Avi Krawitz addresses the bouyant rough diamond sales by De Beers and ALROSA in January, but notes that this has led many to wonder whether it is sustainable. To wit, does the seemingly improved sentiment truly reflect rising consumer demand, or is it another case of overreach on the part of manufacturers? For while "sightholders were quick to point out that the market mood is currently “much more positive,” it is important that stakeholders are aware of the factors that have underpinned the sudden turnaround in rough diamond demand."
Diamond industry analyst Edahn Golan breaks down how De Beers arrived at its overall sales figure for its first rough sight in 2016: $540 million. Golan writes that De Beers has several sales channels. The largest is to their sightholders - contracted clients who each buy at least $15 million worth of rough diamonds annually - and the accredited buyers, which have second dibs on the offered goods. The current estimate in the market is that De Beers sold a little over $490 million worth of rough diamonds via the sightholder system.
In the traditional sightholder reception during the first De Beers sight of the year, De Beers Group Chief Executive Philippe Mellier said there were some encouraging signs in the diamond industry at the start of 2016, but cautioned that the recovery in the diamond sector remained delicate and that there was likely to be some volatility in 2016.
Bloomberg Business, citing three unnamed insiders, reports that De Beers cut rough diamond prices as much as 7% at its first sight of the year as the biggest producer works to counter slowing demand. De Beers plans to offer about $450 million of diamonds for sale, one said. A company spokesman declined to comment. Slower diamond jewelry sales in China and a credit crunch in the industry has sapped demand. That’s left cutters and traders with excess stockpiles, and forced the biggest producers to cut output and prices, writes Bloomberg.
"Sightholders are looking for revenge for all the pain De Beers caused them over the years," writes diamond heavyweight Leibish Polnauer, founder of Leibish & Co., adding that, "The revolt of many of these Sightolders is imminent. They are fed up, and many of them want to see blood.
Diamond miners are expected to have to offer more price cuts in 2016 to help the industry clear a backlog of stock and revive sales, according to sector experts, Financial Times reports. Lower prices and possible supply cuts will put further strain on the balance sheets of some miners including Anglo American, which owns De Beers, the largest supplier of rough diamonds by value.
Andrew England writes for the Financial Times that while the diamond industry is the backbone of the Botswanan economy - which has transformed from one of Africa's most impoverished to one of its richest, particularly since it convinced De Beers in 2013 to relocate its Global Sightholder Sales from London to Gabarone - it is in dire need of diversification. As Reuters wrote at the time, "The 2011 decision to move ...
In an article identifying the major story of 2015, Rapaport's Avi Krawitz says the re-introduction of generic – or category – marketing is the paramount development for the sector. "With the benefit of hindsight, one could say many of the trade’s grueling challenges could have been met more effectively had investment in category marketing continued to be made in the past decade. Instead, the trade found itself vulnerable to a slowdown in China, unsure about selling to millennials, and facing more prudent retail inventory management.
The miner has set the dates for its sales next year, with the first one taking place from January 18 to 22 which will give an indication of sightholder demand following the crucial holiday sales season and ahead of the Chinese New Year.
Diamond industry analyst Chaim Even-Zohar has published an analysis of the steps that led to, and the potential results of, De Beers' (DB) deferral of contractually obligated purchases from its own rough supplier in Botswana - Debswana (DW). Suddenly, the standard-bearing producer of rough diamonds is behaving like any other rough trader further downstream, refusing to purchase rough diamonds that are overpriced.
At $70 million, De Beers' November sight was among its smallest ever, as the miner kept prices stable and allowed clients extra flexibility due to the slump in global demand. “It was a small sight as we expected because of the Diwali holidays,” David Johnson, head of midstream communications, told Rapaport. “We recognize that there are challenges in the industry and that we’re still in a destocking period. So our focus was to be flexible to meet sightholder needs.”