Banners
Banners
Banners
Banners

Diamond Market To Normalise End-2010

Staff Writer
De Beers expects to see the diamond market returning to normal business towards the end of this year, with sales of rough diamonds improving markedly at the start of this year, said De Beers MD Gareth Penny.

Admittedly, a year-on-year sales comparison would be coming off a very low base when the diamond market was going through one of its toughest periods in decades. The global economic slump curtailed demand for luxury goods in the Western markets and financing dried up.

Diamond production by the De Beers group dropped 49% to 24.6m carats during 2009, while the value of diamond sales by marketing the Diamond Trading Company (DTC) fell 46 percent to $3.23bn.

"We see the business returning to normalisation towards the end of this year or early next year," Penny said on the World At Six, a week-nightly business radio programme.

"It's not to say we'll be back to full production but we would see a return to a more normal business environment and at that point one's then got additional assets and additional capacity that would be appropriate for the future," he said.

De Beers temporarily closed mines early in 2009 to ensure supply matched curtailed demand. It has brought its mines back into production but not at full capacity.

In the first half of 2009, De Beers produced just six million carats out of its normal 20 million carats and its generated 18 million carats in the second half.

Sales of rough diamonds are showing real signs of life again, Penny said.

"Sales in January were more than five times what they were a year ago," he said. Rough diamond prices were up nearly 13 percent in the second half of 2009.

Banners
"We've seen quite strong price rises early this year."

The impact on diamond jewellery sales last year was not nearly as pronounced on rough diamond sales, with a 10 to 15 percent decline in the United States, the single largest retail market of diamonds, and a 3-5 percent reduction globally.

Explaining why DTC sales were so severely impacted, Penny said: "The reason the impact always so extreme as you move up the pipeline is the backward ripple. As each part of the pipeline destocks, so at the producer end you get a very pronounced impact compounded by the lack of liquidity in the pipeline.

"The good thing is when it turns you get the forward ripple. We're starting to see it."

Part of De Beers' strategy is to begin opening De Beers branded retail outlets in China, much like it has in Taiwan, Korea, Hong Kong and elsewhere, but it will be a cautious approach, Penny said. "China, even last year, given everything happening around the world, we still saw between 10-15% in retail diamond sales. We like the other luxury good sectors are seeing phenomenal growth there which is positive for the future."

De Beers issued $1bn worth of shares to its three owners, each of whom followed their rights. This allowed the diamond company to repay $1bn of $1.5bn of debt falling due in March. The remaining $500m has been included with another $1.5bn of debt with a later repayment date.-(Miningmx)



Banners
Banners

Selefu

covid 19 positive people from neighbouring countries

Latest Frontpages

Todays Paper Todays Paper Todays Paper Todays Paper Todays Paper Todays Paper
Banners