Diamond Gems Weekly - May 20.
Well, that was a wild week if ever there was one in the diamond industry. The market sure has a way of keeping us on our toes. Here’s what caught my attention in the past week, reflecting the mood / state of the diamond trade.
1. Will new investors be able to unlock value in De Beers where long-time owner Anglo American could not? Anglo confirmed plans to “divest or demerge” from the diamond company. Amid rumors of potential investors, ranging from luxury houses to sovereign wealth funds to the Oppenheimer’s, a public listing is also being considered. Check out my latest video in which I outline what’s on the table.
2. It seems to be the season for divesting from diamond mines. Lucapa is considering selling its 70% stake in the Mothae mine in Lesotho. The open-pit operation yielded 32,884 carats and generated sales of $24.9 million at an average price of $745 per carat in 2023. Here’s a question to ponder: Do these divestments reflect a lack of confidence in diamonds?
3. The rough market remains subdued. Petra Diamonds reported like-for-like prices at its May tender were down 2.6% from its previous sale in April. While there was evidence of stabilization in the market, demand was slightly muted due to the Indian holidays and the slow recovery in the Chinese market, Petra said.
4. Sarine Technologies, which is a service and equipment provider to the manufacturing sector, saw flat sales of $11.2 million in 1Q 2024. Economic challenges in China, the expansion of lab-grown diamonds, and vagueness relating to the G7 sanctions on Russian goods fueled uncertainty, Sarine said.
5. Challenges in the manufacturing sector were evident in India’s diamond data for April. Polished exports fell 13% year on year to $1.2 billion during the month, while rough imports slid 18% to $1.2 billion. Both metrics are down for the year to date (see graph). As the largest manufacturing center, buying rough and supplying polished, the declines reflect the ongoing pressure experienced in the midstream. Data from the Gem & Jewellery Export Promotion Council (GJEPC).
6. In contrast, Richemont underscored the robustness of the luxury segment as the high-end brands continue to outperform a straggling market. The group reported jewelry sales rose 6% to CHF 10.7 billion ($11.8 billion) in the financial year ending March 31. Its jewelry maisons – Buccellatti, Cartier, and Van Cleef & Arpels – had an operating margin of 33.1%. In the last two weeks, Richemont announced the appointment of Nicolas Bos, current CEO of Van Cleef & Arpels, as group CEO, and the acquisition of Italian jewelry brand Vhernier.
7. Phillips tends to fall under the shadow of Sotheby’s and Christie’s. But it’s worth noting the beautiful offering of goods at its Geneva auction, particularly the top lots. A 6.21-carat, fancy-vivid-pink, VS1-clarity, type IIa diamond ring fetched $12 million. A 1.56-carat, fancy-red diamond from the Argyle mine brought in $4.2 million – nearly triple the high end of its presale estimate. No doubt the rarity of Argyle goods played a role given that the mine was closed in 2020.
8. With the magnificent Geneva sales behind us, the auction circuit turns to New York with some stunningly beautiful pieces on offer. The highlight at Sotheby’s will be a pear-shape, 53.04-carat, D-color, IF-clarity stone with an expected price tag of up to $5 million when it goes under the hammer on June 7. (Image from Sotheby's)
9. The Kimberley Process (KP) inter-sessional meeting in Dubai ended with a call for countries to list the mining origin on KP certificates for mixed parcels. This ties into the traceability mechanisms being worked on by the G7 nations relating to their sanctions on Russia goods, for which proof-of-origin disclosure will be require as of September 1. KP certificates cannot be relied upon as they typically reflect the last port of exit, and since rough from different sources are mixed together along the way. It is worth reading the closing address by Feriel Zerouki, president of the World Diamond Council (WDC), for a handle on the points discussed at the KP meeting.
10. Finally, we learned of the passing of Rory More O’Ferrall, a former De Beers executive who played a central role in creating the WDC and shaping the KP as well as the Diamond Development Initiative (DDI), which supports small-scale diamond miners. Very seldom do interviews that I’ve conducted in the past jar my memory. But I remember with great fondness meeting Rory in 2014 to discuss DDI. He was kind and generous with his time and information, and passionate about the subject at hand. My deepest condolences go to Rory’s family. Meanwhile, it’s worth revisiting my write up from that interview here, with the knowledge that part of his legacy lives on.
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