Early Diwali Setback for De Beers Uncut Gem Sales

De Beers, the world’s biggest diamond producer by value, yesterday reported that its rough diamond sales had tanked to R6.54 billion in the seventh cycle of 2017 due to an early Diwali.

De Beers, a subsidiary of Anglo American, said proceeds from rough diamond sales fell 12% from $576m in the sixth cycle of 2017. It said the sales were also 21% lower than the $639m posted in the same period a year ago.

De Beers chief executive Bruce Cleaver said: “As expected, rough diamond sales were lower in the seventh cycle of the year, with some midstream demand having already been brought forward into cycle 6 due to Diwali being earlier in 2017.

“Businesses in the diamond industry’s midstream segment are adopting a watchful approach as attention turns to the Hong Kong Jewellery and Gem Fair in mid-September.”

De Beers said last month that the sixth sales cycle of the year had maintained the trend of consistently good demand for De Beers’s rough diamonds across the product range. “With Diwali being earlier than normal in 2017, we saw some demand from Indian diamantaires pulled forward from cycle 7,” said Cleaver.

“This was due to these customers needing to make rough diamond purchases in sufficient time to complete their polishing before the holiday begins.”

De Beers, which operates the Venetia mine in Limpopo, said in July that second-quarter diamond output released had jumped 36% as mining started at the new Gahcho Kué mine in Canada.

In June, De Beers announced it had launched the world’s largest diamond exploration ship to operate off the coast of Namibia, in a bid to look for higher-value gemstones to help it fight off increasing competition.

The company said that the 113m-long SS Nujoma was able to sample for diamonds at double the speed of other ships in the company’s fleet and help extract higher-value diamonds than on land.

Offshore diamond mining was becoming increasingly important in meeting the global demand for diamonds as many of the major onshore deposits had now been discovered.

De Beers had also identified India along with other top diamond markets, including China and the US, for its future growth and would be investing $140m in the marketing of its brands in these countries.

Jamie Campbell, a director for natural resources sales at the UK-based Panmure Gordon, said commentary from the previous announcement had predicted a weaker outcome in this sale.

“This was due to many purchases being brought forward as Diwali was earlier this year, and that has borne true.

“Buyers remain cautious ahead of the important Hong Kong jewellery shows and while the impact of recent bankruptcies are being considered,” Campbell said.