The Debswana Diamond Company (Debswana), a 50/50 joint venture between the Government of the Republic of Botswana and De Beers Group, has today (March 18, 2019) announced the commencement of the Cut-9 project to extend the life of Jwaneng Mine, one of the world’s most valuable diamond mines. The project will extend the life of Jwaneng Mine to 2035, and is expected to yield an estimated 53 million carats of rough diamonds from 44 million tonnes of treated material. It is called Cut-9 because it is the ninth cut, or expansion, of the mine.
There is no fundamental change in the small diamond segment. The slowdown in the smaller sizes during the second half of last year is mainly cyclical – it is driven primarily by demand-supply dynamics. It is a misconception that there is any fundamental change in consumer behavior. The prices are coming down to where they should be, and this is mainly because retailers have realized how large the margins of LGD manufacturers have been. They are now understanding the pricing dynamics for this category and are asking their suppliers why they are charging so much.
The Diamond Producers Association (DPA) and Signet Jewelers have published the first results of their ASSURE Program to independently and objectively test the performance of laboratory-grown diamond detectors (Diamond Verification Instruments). The program intends to eventually test and identify each machine on the market concerning how well they detected or referred man-made stones, including the rate at which they gave false positives.
De Beers sold $490 million worth of rough diamonds in Cycle 2 2019, holding steady at just $10 million less than their January sale but at a lower level than last year. The miner's sales fell 13% compared to the $563 million sold at their second sight last year, and combined sales for the first two sights of the year have fallen by 20% compared to 2018.
The De Beers group is set to consolidate its Canadian and South African mining business into a single unit to streamline operational management of the Venetia Mine, Gahcho Kué Mine and De Beers Marine under a single leadership team based in Johannesburg. The new unit, called De Beers Group Managed Operations, will be headed by the group’s former DBCM deputy CEO, Nompumelelo (Mpumi) Zikalala.
De Beers reported a 4% rise in total revenue for FY 2018, reaching $6.1 billion, but its earnings slid by 13% to $1.25 billion driven by expenditures such as the $87 million acquisition of Peregrine Diamonds and the launch of Lightbox Jewelry. Rough diamond sales rose by 4% to $5.4 billion (2017: $5.2 billion), driven by improved overall consumer demand for diamond jewelry and a 1% increase in the average rough diamond price index.
The state of the diamond mining industry as 2019 enters full swing is concerning to many throughout the trade. The fall in prices of small, lower-quality diamonds, a staple of many miners, had participants at the Africa Mining Indaba last week concerned about the sustainability of their operations if the market does not correct this year, with some even concerned about their survival.
Russia's Alrosa, the world’s largest diamond miner, could not escape the current trend on the rough diamond market at the start of 2019, as its rough diamond sales plunged by 44% to $278 million from $499 million in January 2018. This is in sharp contrast to December sales, however, when rough sales increased by 46% over the previous year. Polished-diamond sales in January were $3.4 million, bringing total sales for the month to $281.5 million.
De Beers' first sight of the year provided no indication that the sluggishness of the market for lower value rough is ready to subside. The January sight is typically one of the largest of the year, as manufacturers restock after the Christmas season in preparation for the holidays ahead, including Chinese New Year and Valentine's Day. De Beers rough sales in Cycle 1, however, were much lower than the two previous starts to the year.
The De Beers Group has announced its production results for 2018 and Q4 2018, reporting that annual production increased by nearly 7% to 35.3 million carats, while a 4% decline in carats sold was offset by a higher average price per carat, leading revenues to rise 2% to $5.4 billion. They said the rise is production was due to a planned increase at the Orapa mine, although the group's output was in the lower half of the production guidance range of 35 to 36 million carats.
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.
De Beers' parent company Anglo American has announced a slight rise in its guidance for diamond output this year to 35-36 million carats (previously 34-36 million carats), marking a rise from the 33.5 million carats recovered in 2017. They estimate a reduction in 2019 volumes down to 31-33 million carats due to declining open pit production at the Venetia mine in South Africa as it transitions underground, and the Victor mine in Canada reaching its end-of-mine-life.
Mountain Province Diamonds says that it expects the Gahcho Kué mine in Canada, a JV with De Beers (51% owner), to surpass its 2018 production guidance of 6.6 million carats. Output is then expected rise to a range of 6.6 million to 6.9 million carats in each of 2019 and 2020, followed by 6.8 million to 7.1 million carats in 2021. The miner says the production guidance over the three-year period 2019 to 2021 is evidence of a sustainable and smooth mining rate as the mine performance maintains a steady state.
Independent diamond industry analyst and consultant Paul Zimnisky, proprietor of the Zimnisky Global Rough Diamond Price Index, takes an in-depth look at developments in the laboratory-grown diamond market in his latest contribution to the discussion, "2018: The Year of the Lab-created Diamond". Here he focuses on the impact (or current lack thereof) that De Beers launch of its Lightbox lab-grown diamond line (announced late May 2018, first available late September 2018) has had on the pricing of laboratory-grown goods.
Discussions between the Government of Botswana and De Beers Group are already underway as the long-standing partners look to strike a new deal. The current 10-year agreement for the sorting, valuing and sales of Debswana’s diamond production (Debswana is a 50/50 mining joint venture between Botswana and De Beers) is set to expire at the end of 2020. Botswana is reportedly pushing for a larger stake in its "new marriage" with De Beers ahead of the negotiations for the next sales agreement, writes The Southern Times.
Riding the current wave of depressed rough diamond sales throughout the industry in recent months, De Beers' ninth sale of 2018 earned (provisionally) $440 million, the miner's lowest earnings in a sales cycle since October 2017. Soft demand from India has been the predominant factor in the decline of rough sales - particularly of smaller goods - across the industry.
Several sources, including Bloomberg and Rapaport, have reported that De Beers has slashed its prices on lower-quality diamonds at its latest sight this week, with the discounts ranging from high-single digits to as much as 10%. Difficult trading conditions have been widely reported in the rough diamond market in recent months, although the market for higher-quality and larger goods has remained strong with firm pricing in all categories.
Canadian miner Mountain Province's production and sales of rough diamonds from the Gahcho Kué mine underwhelmed in the third quarter of 2018, as production was on the downside of flat during the quarter, while sales increased against a low comparison point in 2017 and the cost of production rose. Sales increased by 15% to US$57 million (C$75 million) at an average price of US$73 per carat, but net income dropped by 37% to US$13 million (C$17.5m) from US$21million (C$16m).
The world's two largest diamond miners are joining forces to provide enhanced assurance for consumers and trade participants about the provenance and authenticity of their diamonds, as ALROSA has joined De Beers' blockchain pilot program - Tracr.
De Beers’ rough diamond production declined by 5% to 8.7 million carats in the third quarter due to planned reductions in mining volumes in Botswana and South Africa, the miner announced today. In Botswana, production at the Jwaneng mine declined by 6% to 5.7 million carats due to the planned processing of lower grade material. Production at the Orapa mine remained in line with Q3 2017 at 2.6 million carats.
The De Beers Group provisionally sold $475 million worth of rough diamonds during their eighth sales cycle (October 8-12) of 2018, representing the lowest value of sales at a sight this year. October sales fell by about 6% compared to Sight 7 after the actual September sales were revised down to $503 million from the provisional value reported last month at $530 million. Still, the recent sight is a significant, 26% improvement in comparison to the $376 million in rough sales achieved at Sight 8 in 2017.
Having set our sights on a half-carat white solitaire pendant set in a silver necklace for $500, today we received an e-mail informing us we can place our order tomorrow (Thursday). Lightbox - De Beers' lab-grown diamond jewelry line - which has sparked outcry, applause, debate, and concern throughout the diamond world (natural as well as synthetic) will finally make its debut after a heated summer. The line as it now stands consists of pastel pink, white and baby-blue lab-grown studs and pendants, priced from $200 for a quarter carat to $800 for one carat, not including the setting.
The International Institute of Diamond Grading & Research (IIDGR), a member of De Beers Group, yesterday announced that its industry-first synthetic screening device, SYNTHdetect, was awarded Industry Innovation of the Year at the JNA Awards in Hong Kong. The announcement follows the launch earlier during the week of IIDGR's SYNTHdetect XL, a larger version of the original model that provides additional efficiencies for users, allowing a multiple pieces of jewelry to be screened at an even faster rate while using the same technology as the original SYNTHdetec.
The Millennial and Gen Z generations combined accounted for two-thirds of global diamond jewelry sales in 2017, as diamond jewelry demand reached a new record high of US$82 billion, according to data published today by De Beers Group in its latest Diamond Insight Report.
Diamond mining giant De Beers reports provisional sales of $505 million during the seventh cycle (September 3 - 7) ahead of the Hong Kong Jewellery & Gem Fair, which gets underway this week. Rough sales were flat year-over-year ($507 million in 2017) and declined as anticipated from the $533 million sold in Cycle 6.
Signet Jewelers' CEO Gina Drosos said the brand will follow consumer demand when deciding whether the company will start selling lab-grown diamonds in its stores, which currently number about 3,500 (3,000 in North America, 500 international). Industry insiders have told us they suspect decision has already been made. The CEO made the remark during a conference call about Signet's Q2 2019 results.
Peregrine Diamonds announced its securityholders voted last Friday to approve the move by De Beers Canada to acquire the company for a total equity value of approximately C$107 million ($81 million). De Beers Canada and Peregrine Diamonds first announced the agreement in July, whereby De Beers would acquire 100% of the outstanding shares of Peregrine for $0.24 per share in cash. The transaction represents a 50% premium to Peregrine’s share price of $0.16 on July 18, 2018, and a premium of 44.5% to the volume weighted average price of the shares for the 20-trading days ended July 18, 2018.
Canadian miner Mountain Province Diamonds earned $22.2 million (C$28.9 million) from 334,751 carats of Gahcho Kué goods sold at its recently completed sixth diamond sale of the year. The average price earned of $66 per carat was lower compared to the previous sale of $85 a carat, "driven by a much smaller offering of fancies and specials and a slight softening in prices for smaller, lower priced diamonds," said Reid Mackie, the Company’s Vice President Diamond Marketing, but the price earned was in line with expectations.
Tracr, the end-to-end diamond industry blockchain being developed by De Beers Group in collaboration with industry stakeholders, has announced the appointment of Jim Duffy as General Manager to lead the next phase of the platform’s development. Duffy assumes the new role as the platform starts to build greater scale, with more than $100 million worth of rough diamonds having been registered on the platform since the launch of the pilot in January 2018.
Sales at Botswana's state-owned Okavango Diamond Company (ODC) fell by 16 percent in the first half of 2018 to $260 million, said managing director Marcus ter Haar, citing a high comparison base against last year's record growth, as Reuters reports. The company sold 1.778 million carats in the first half of 2018 compared with 1.808 million carats in the same period last year.
Industry consultant Ben Janowski takes an in-depth look at the developments that led De Beers to enter into the laboratory-grown diamond jewelry sector, and what Lightbox may mean long-term for the mining giant. Published in full courtesy of Ben Janowski, who will be lecturing at the Antwerp Summer University program, "From Mine to Finger 2018: A deep dive into the world of diamonds."*
De Beers Group (provisionally) sold $530 million in rough diamonds during the sixth Cycle of 2018, representing a 9% decline from the $581 million sold during the previous cycle, and an 8% drop compared to the same period a year ago. The company attributed the slowdown to a seasonal decline rather than any structural change to demand, having remarked recently that the outlook for 2018 global consumer demand remains positive in most of the main diamond-consuming countries, based on world economic prospects, positive consumer sentiment and continued investment in marketing.
Despite a slight uptick in revenues (to $3.2 billion from $3.1 billion), higher production costs weighed down De Beers' first half underlying earnings (EBITDA/earnings before interest, taxes, depreciation and amortization) by 9% percent, falling to $712 million from $786 million. While the company's top representatives emphasized its strong first half both operationally and financially, with continued growth in consumer demand, De Beers CFO Nimesh Patel attributed the decline in EBITA "principally" to "the stronger [South African] rand.
Canada’s Mountain Province Diamonds second quarter output at the Gahcho Kué mine jumped by 20 percent to 1.9 million carats compared with 1.6 million carats a year earlier as plant optimization led to better-than-anticipated performance, and recovered grade continues to outperform expectations. The plant treated 899,000 tons during the quarter, 17% ahead of the same quarter last year despite a decline in ore tons mined, and achieved a higher average grade.
A full house at the Antwerp Diamond Bourse, including stakeholders from across the spectrum of the diamond industry, greeted De Beers Group representatives Paul Rowley and Nimesh Patel as they explained the company's foray into the synthetic diamond jewelry market and reinforced its commitment to the natural diamond industry.
De Beers Canada and Peregrine Diamonds Ltd. today announced they have entered into an agreement whereby De Beers will acquire 100% of the outstanding shares of Peregrine for $0.24 per share in cash for a total equity value of approximately C$107 million (US$81 million). Peregrine Diamonds is a TSX-listed diamond exploration and development company and owner of the high quality Chidliak diamond resource located in Canada’s Nunavut Territory.
De Beers rough diamond production increased three percent to 9.0 million carats during the second quarter of 2018, "reflecting production increases to meet stronger demand as well as the contribution from the ramp-up at Gahcho Kué", the company today announced.
Element Six, a synthetic diamond manufacturer and member of the De Beers group of companies, planted their shovels in tthe Oregon soil to mark the symbolic commencement of construction on their $94 million manufacturing facility for laboratory-grown gems, produced exclusively for De Beers’ new fashion-jewelry brand, Lightbox Jewelry. The new brand will offer consumers laboratory-grown diamonds in high quality designs for casual, everyday occasions at lower prices than existing synthetic offerings.
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.