Wednesday, November 30, 2011
Gem Diamonds Expansion project at the Company’s Letšeng mine in Lesotho Approved Read more: Gem Diamonds Expansion project at the Company’s Letšeng m
Gem Diamonds Limited announce that the expansion project (known as Project Kholo) at the Company’s Letšeng mine in Lesotho has been approved by the Company’s Board and by the Board of Letšeng Diamonds Pty Limited (“Letšeng”).
Project Kholo will commence in January 2012, and will ramp up to full production by July 2014. The project will increase the annual treatment capacity of the Letšeng mine to 10 million tonnes per annum (currently 5.6 million tonnes per annum) with carat output increasing to circa 200,000 carats per annum (currently 100,000 carats per annum). The total project capital expenditure for Project Kholo is estimated at US$ 280 million. The project IRR is expected to be 40% and payback is expected in 2016. Project Kholo will be funded out of existing and future cash flows (based on current diamond prices and exchange rate assumptions). The NPV of the Letšeng mine (100%), including Project Kholo, is US$ 2.5 billion.
Gem Diamonds currently has US$ 151 million cash on its balance sheet and Letšeng has recently secured a revolving credit facility of Maloti 250 million (US$ 31 million) for general corporate purposes.
The Company is currently considering all of its options regarding its Ellendale mine asset in Australia and has appointed advisors to assist in this regard.
Gem Diamonds CEO, Clifford Elphick commented:
“Gem Diamonds is very pleased to announce that as a result of the approval given by the Company’s Board to the expansion project at the Letseng mine, the number of carats of the remarkable diamonds which it produces will effectively be doubled. Given the industry consensus around the extremely positive supply/demand dynamics for high end diamonds, it is an investment which signals Gem Diamonds’ confidence in its future growth. “
Tuesday, November 29, 2011
The statistics or estimates of proceeds from Marange diamonds are so mind-boggling in their discrepancies that at the end of the day, one is left with a clueless jigsaw puzzle, if not a headache.
For instance, following the lifting of the ban on the sale of Marange diamonds by the Kimberley Process (KP) Zanu-pf Mines Minister Obert Mpofu announced that the government expects US$2 billion yearly gross from Marange diamond sales.
Then there was a hint that of that amount, US$300 million was earmarked for civil servants bonuses, without clarity about what the rest of the greater portion of the remaining US$1.7 billion would be used for after paying shareholders and hopefully taxes.
Meanwhile, the US$300million for civil service pay arguably includes an estimated 75 000 ghost workers when government is spending US$960 million or more than 60 percent of its revenues per year on recurrent expenditure without any meaningful investment in infrastructure unlike other SADC countries.
Just two months ago, a war of words erupted between Finance Minister Tendai Biti and Mines Minister Obert Mpofu over the remittance of money realised from the sale of diamonds.
Of concern were the low remittance figures despite the huge production at Marange in 2011. For example, between January and June 2011, Zimbabwe exported 716 958.50 carats from Marange diamond fields and during that period only US$103.9 million of diamond export shipments was accounted for.
Then, in his recent budget speech, Finance Minister Tendai Biti confirmed diamond dividend receipts of US$ 122 million in 2011 and said he had held extensive consultations with the Mines Minister and diamond producers who had assured him of minimum US$600 million additional revenue for 2012.
Now, if during the first half of 2011 only US$103.9 million of diamond exports were accounted for and by November 2011 the year's proceeds to Treasury totalled US$122 million, it means only US$18.1million of diamonds were exported in the second half of 2011 - a huge discrepancy that defies logic and deserves clarification.
In 2010, declared total proceeds from diamond sales amounted to US$313.5 million from which Government received US$48.4 million while US$41.6 million was belatedly received in February 2011. The rest was reportedly paid to ZIMRA as royalties, corporate tax, VAT and withholding tax.
How do the ministers account for such wide variances in their estimates in view of last year's unconvincing figures and remittances amidst allegations of smuggling and undervaluing of Zimbabwe's gems which were then sold on Asian markets for a song?
For instance, if in 2010, diamond revenue was US$313 million how does Minister Mpofu account for his estimate of US$2billion annually henceforth? Does that mean because there are no more loopholes, so we can expect more revenue? Can Mpofu's estimate also apply in retrospect?
Similarly, if Treasury received only US$122million in 2011, what has convinced it that it will get a minimum US$600 million in 2012?
GLOBALY diversified miner BHP Billiton said this morning it is reviewing its diamonds business, including evaluating a potential full or partial sale, to examine whether a continued presence in the industry fits with its business strategy.
BHP owns an 80 per cent equity stake in the EKATI Diamond Mine and a 51 per cent stake in the Chidliak exploration project, both located in Canada.
Although BHP said EKATI is a world class operation and Chidliak offers promising exploration opportunities, it said: "Many years of extensive exploration suggest there are few options to develop new diamond mines that are consistent with (its) approach" of focusing on developing large, long-life, and expandable assets.
The Anglo-Australian miner expects to complete its review by the end of January.
The announcement follows the Oppenheimer family's recent $US5.1 billion sale of its 45 per cent stake in South African diamond producer De Beers to miner Anglo American.
Anglo sees diamonds being undersupplied in the future at the same time as demand from China, India and the Gulf States rises to equal that of the US, the world's largest consumer. The US accounts for 40 per cent of diamond demand.
Analysts said the sale of BHP's diamond business would make sense, as the EKATI mine is neither long-life nor a major contributor to the company's bottom line.
EKATI has a mining life closer to five years and accounts for less than 2 per cent of BHP's earnings before interest, taxes, depreciation and amortisation, or EBITDA, said RBC Capital Markets mining analyst Des Kilalea.
A London-based analyst, who wished not to be named, valued EKATI at $US1.8bn based on its short mine life and said potential suitors could include Rio Tinto, which owns the adjacent Diavik mine, and De Beers, which has two producing mines and a joint exploration project in the Northwest Territories.
EKATI is located 200 kilometres south of the Arctic Circle in Northwest Territories and produced an average of more than 3 million carats of rough diamonds a year over the last three years, or approximately 10 per cent of the world's annual diamond supply by value.
BHP said it will only consider a sale if it can ensure EKATI's environmental standards, safety and local community economic benefits.
"In the event that these criteria aren't met, BHP Billiton will continue to operate its world class diamonds business in a sustainable manner," it said.
BHP also owns a stake in Chidliak, a joint venture diamonds exploration project with Peregrine Diamonds, located on Baffin Island. Exploration at the mine, which has been operated by Peregrine since 2006, is ongoing with seven of the 59 known kimberlites having economic potential and the others still being assessed.
Monday, November 28, 2011
Debswana has embarked on a cost-saving and reprioritization exercise to mitigate the effects of the current market volatility, deteriorating global economic conditions and a decrease in both demand and prices of rough diamonds in the past few weeks, The Southern Times learnt this week.
Debswana is a joint venture between the Botswana government and diamond mining giant, De Beers.
The company is the world’s largest diamond producer by value and second largest producer by volume.
Group public and corporate affairs manager Esther Kanaimba-Senai said following the rapid-price growth of rough diamonds earlier in 2011 ( up 45 percent), the situation in the market had become more challenging in recent months with lower volumes of diamonds being traded.
This is in addition to rough and polished diamond prices sliding and liquidity problems being felt at the cutting centres.
“The reduction in polished prices (down 10 percent) and lack of liquidity has meant that rough sales and rough prices have been under pressure.
“There is limited amount of cash available for diamantaires (expert diamond cutters and polishers) to purchase.
“Trading of rough diamonds in the secondary market has been very depressed. Tenders and auction prices have reduced by 20-50 percent,” she said.
Kanaimba-Senai said the situation has resulted in substantially reduced rough diamond sales during the 2011 penultimate sight (selling period) which ended on the November 3.
Indications are that the last sight for the year might also be small.
The first sights of 2012 will also be impacted until the Christmas sales figures are known. As such Debswana is putting in place plans to mitigate the situation.
“In spite of these challenges, consumers have continued to buy diamond jewellery throughout the year, with particularly strong sales in India and China and better-than-expected performances in the US.
“If the end of the year selling season (results not known until end of February 2012) meets expectations then things may return to normal,” she said.
Kanaimba-Senai added that the announcement by European leaders of a eurozone debt deal should also improve the situation.
Debswana said it will continue to maintain an uncompromising focus on safety, conserve cash by eliminating all discretionary expenditure and review production activity so that only cash-efficient core activities are undertaken.
Meanwhile, the allocation of rough diamonds for beneficiation in Botswana will gradually increase to US$800 million within the next three years, Minister of Minerals, Energy and Water Resources Ponatshego Kedikilwe has said.
“That would be a significant increase from the 2005 beneficiation which stood at about US$28 million and just above US$400 000 in 2010,”the minister told a Diamond Processing Exchange Conference this week.
According to Kedikilwe the full diamond beneficiation impact will be felt in the long-term.
“The diamond beneficiation programme would increase the mining sector’s contribution to job creation and income generation.
“There were 16 factories as at the end of September this year with a total employment of 3 262 of which 2 876 were Batswana,” he said.
He added that the country continued to be rated favourably by international institutions owing to factors such as competitive mining laws, low sovereign risk and social risk as well as good infrastructure. “This favourable investment climate is not limited to the minerals sector but prevails in the wider economy.
“The government is alive to the fact that economic diversification was a partnership of different players particularly the private sector.
“To achieve, Botswana should create an environment conducive to investors,” he said.
Botswana, Kedikilwe said, as a founding member of the Kimberly Process Certification Scheme (KPCS) continued to uphold its values and principles.
“Such is to ensure that diamonds were used for development and appealed to all stakeholders to ensure that the Kimberly process is natured as it existed for orderly survival of the industry,” said the minister.
The conference, organised by the World Bank and the Botswana government, brought together industry stakeholders to thrash out issues affecting the processing of rough diamonds
Economist and former Bank of Botswana Governor Dr Keith Jefferies observed that the country was probably the largest economy in the world which depended heavily on a single mineral source.
“Diamond production would probably reduce by 2030 hence leading to declining government revenues.
“Diversification from mining and related sectors is of paramount importance,” he cautioned. “Beneficiation did not necessarily have to be located where the source or users were based hence that of diamonds could be done anywhere in the world.”
Alrosa Diamond Company Reports Robust demand for rough diamonds was observed from January to July Read more: Alrosa Diamond Company Reports Robust de
On November 24, 2011, the Executive Committee of the Company met in Mirny chaired by ALROSA’s President Fyodor Andreev.
The Executive Committee discussed the implementation of ALROSA’s consolidated budget for the nine months of 2011.
Three quarters of the year were characterized by uneven development of the rough and polished diamond market. Robust demand for rough diamonds was observed from January to July. Starting from August, purchases of diamonds in the world market slightly reduced, what is explained by traditional slowdown in business activity in August-October, unstable world economy, liquidity slump and, as a consequence, reduction of speculative component, as well as increased rough diamond stocks in cutting centers and reduced prices for polished diamonds. Nevertheless, ALROSA Group sold rough diamond products for USD 3,555.1 mln. and reached high sales volumes over the nine months of 2011.
For the first nine months of 2011 ALROSA Group (OJSC «ALROSA», OJSC«ALROSA-Nyurba», OJSC «Almazy Anab ara», OJSC «Severalmaz») rough diamond production reached 26,238,100 carats.
Net profit of ALROSA Group for nine months under RAS:
OJSC «ALROSA» — RUB 23,882.6 mln.
OJSC «Almazy Anabara» — RUB 2,531.3 mln.
OJSC «Severalmaz» — RUB 20.3 mln.
OJSC «ALROSA-Nyurba» — RUB 5,612.7 mln.
The excess net profit of OJSC «ALROSA», OJSC «Almazy Anabara» and OJSC «Severalmaz» was RUB 1,574.2 mln., RUB 178.0 mln., and RUB 16.8 mln., accordingly.
The actual indebtedness on credits and loans as at September 30, 2011, was USD 3,314.2 mln. The ratio of short-term to long-term liabilities is 30% and 70%, accordingly.
ALROSA allocated some RUB 3,200 mln. for geolog ical prospecting and exploration works.
The Executive Committee discussed the results of navigation in 2011. 403,000 tons of materials and equipment were delivered in total, of which 13,000 tons in excess of the plan. Delivery volume increased more than 20% as compared to the crisis period (2009–2010).
The Executive Committee also discussed the results of procurement for the nine months of 2011.
Over the accounting period, ALROSA purchased goods, works and services for the total amount of some RUB 27 bln. 600 mln. The increased share of purchases made on the basis of competitive bidding allowed the Company to save by reducing the prices from the initially proposed commercial offers of some RUB 1 bln.
De Beers Diamond Jewellers, the definitive diamond jewellery destination, opened its Tianjin store at The Friendship Mall. Following the opening of its first store in Beijing in May, the Tianjin store is De Beers' second store in mainland China and represents De Beers' expansion into the fast growing Chinese market. This expansion recognises the demand for exquisite designs and diamonds of superlative quality by Chinese consumers.
Famed for creating the "A diamond is forever" slogan, De Beers brings over 120 years of peerless diamond expertise and passion to China. The 75 square metre store features some of De Beers' most beautiful and important collections, including stunning solitaires, timeless classics and one-of-a-kind High Jewellery creations.
The opening was hosted by Francois Delage, CEO of De Beers Diamond Jewellers, Andrew Coxon, President of De Beers Institute of Diamonds and special guest and famed actress Karen Mok, whose elegant natural beauty was matched only by the exquisite De Beers Diamond Jewellery adorning her. In her first public appearance in China since her fairy tale wedding at the beginning of October, she looked stunning in the De Beers Wildflowers Collection large statement necklace, one line bracelet and statement ring."I'm delighted to once again wear pieces from the Wildflowers Collection - it brings me back to my wedding day!" Karen completed her look with a black Fendi Ready-to-Wear dress.
"We are delighted to open our first store in Tianjin following the successful opening in Beijing in May. We are now able to fully share our exceptional passion and expertise in diamond selection, craftsmanship and design to one of the largest and most discerning markets in the world," explains Francois Delage, CEO of De Beers Diamond Jewellers.
Andrew Coxon, president of De Beers Institute of Diamonds commenting on the Tianjin opening: "Every De Beers diamond is meticulously hand-selected to ensure that it has exceptional Fire, Life and Brilliance. We know that the highly discerning Chinese client will no doubt appreciate the superior sparkle and transparency that our specially selected diamonds exhibit. To help showcase this, each De Beers store is equipped with a De Beers Iris, a unique technology that helps customers clearly see the beauty of every diamond through the eyes of an expert."
The second opening into the mainland Chinese market follows the De Beers success as a global destination for diamond jewellery lovers and connoisseurs. De Beers has a worldwide presence with stores located in the most sought after locations such as Fifth Avenue in New York, Printemps and Galeries Lafayette in Paris, Old Bond Street in London, The Landmark in Hong Kong, Shin Kong Place in Beijing and Ginza in Tokyo.
De Beers Diamond Jewellers was established in 2001 as an independently managed and operated joint venture bringing the luxury retail and branding expertise from LVMH Moet Hennessy Louis Vuitton, the world's leading luxury products group, and De Beers SA, the world's premier diamond mining and marketing company.
THE DE BEERS DIFFERENCE
De Beers Diamond Jewellers is the ultimate destination for diamond jewellery. With over 120 years of diamond experience to draw on, De Beers Diamond Jewellers go well beyond the '4C's' of carat, weight, clarity, colour and cut to capture unmatched fire, life, and brilliance, providing the most beautiful diamonds in the world set in magnificent designs. The results are nothing less than sublime. The creation of timelessly elegant diamond jewellery -- from selecting the world's finest diamonds to impeccable craftsmanship and sophisticated designs -- is the De Beers difference, an absolute expression of the Art of Diamond Jewellery.
De Beers are proud to be the only brand to demonstrate the beauty of their diamonds, using the De Beers Iris. This proprietary technology, found in each De Beers store provides clients with an objective way to see the beauty of their diamond through the eyes of an expert.
THE DE BEERS GUARANTEE
Each piece of De Beers jewellery is certified with a De Beers passport and each polished diamond above 0.20 carats is microscopically branded with the De Beers Marque. The De Beers Passport documents the specifications of your diamond jewellery and is your guarantee that every single De Beers diamond is natural, untreated, conflict-free and responsibly sourced and manufactured. The De Beers Marque, using technology patented by the De Beers Group, is invisible to the naked eye and ensures that each diamond is individually catalogued in the De Beers diamond registry, confirming its identity as a De Beers official diamond, to provide clients with total peace of mind.
Sunday, November 27, 2011
Government is inundated with unsolicited overtures from international diamond brokerage and consulting firms seeking partnerships for the trading and marketing of diamonds unlocked by the recent agreement with De Beers of a 10 percent independent verification window, sources on Government Enclave have revealed.
However, reliable sources say the bustle will amount to making much ado for nothing because the government is not looking for partnerships. Only a CEO and other top flight managers will be needed for the envisaged rough diamond trading state company.
Under the 10-year deal signed in September, the Government of Botswana will buy 10 percent of Debswana production, estimated at 25 million carats this year, and sell it independently through open tenders outside the traditional DTC framework.
This means under the deal, which was signed eight months after the last agreement expired, government is this year entitled to about 2.5 million carats that it will buy from DTC Botswana and sell through tenders as a way of "verifying" the market.
Officials close to the proceedings told Business Week this week that they had received over 20 applications from international diamond companies seeking partnership deals and management contracts for the 10 percent supply.
"However, we have made it clear to them that we are not looking for partnerships," said one source. "What we want are employees in the form of a CEO and other managers with relevant experience."
Government is currently in the process of recruiting top management personnel for the rough diamond trading company that will be established soon, setting the ball rolling for independently verifying the diamond market.
The 10-year agreement, which provides for an independent sales window for the government, will start at 10 percent of Debswana's run-of-mine production this year that will rise to 15 percent over a five-year period. As part of efforts to turn Gaborone into a world recognised diamond centre, the government has already given the green light to Lucara and Firestone Diamonds to sell part of their production by open tender outside the DTC framework.
Lucara's AK6 Mine expects to produce 400,000 carats in its first year of production next year, a part of which will be sold in Gaborone through the tender system. The selling of the AK6 production on the open market will add flourish to Gaborone's fledgling diamond market that was kick-started by Firestone Diamonds in December last year.
Firestone, which expects to produce one million carats from its BK11 Mine by 2014, has so far conducted four tenders at the Diamond Technology Park (DTP) in Gaborone. Giving form to the dream, work has already begun on construction of a trading facility at DTP, marking the first stage of what will become a platform for independent tenders for local, regional and international diamond producers and buyers trading in Botswana.
Zimbabwe is planning to open satellite offices in Belgium and the United Arab Emirates to facilitate the sale of diamonds from Marange and optimise earnings from diamond mining operations.
Government representatives are already in talks with emissaries of the two countries to finalise modalities of the proposed move.
Mines and Mining Development Minister Dr Obert Mpofu yesterday confirmed the Belgians and Emiratis approached Harare with the offer earlier this month.
He said the envisaged arrangement was specifically aimed at increasing Zimbabwe’s diamond trade.
The UAE and Belgium are among the biggest international diamond buyers.
“We are discussing with Dubai and Antwerp for us to open offices in these countries for the convenience of trading in our diamonds,” he said.
“We would also like to ensure value is added to the gems. It is an encouraging development that will make it easy to polish our diamonds.”
The development comes as Kimberley Process Certification Scheme (KPCS) monitors for Zimbabwe Abbey Chikane and Mark Van Bockstael gave Anjin Mine in Marange the green light to export its two-million-carat stockpile.
This brings to three the number of diamond mining companies operating in the district.
Mbada Diamonds and Marange Resources are the other two.
In a letter to stakeholders last week, KP chair Mathieu Yamba said: “I would like to commend you (the monitors) on the high quality of the work done.
“I take note of the final conclusion, which declared Anjin Investments fully compliant on November 17, 2011.
“Abiding by the Kinshasa Decision, exports from Anjin Investments may, therefore, take place with immediate effect.”
A plenary session held in the Democratic Republic of Congo on November 1 gave Zimbabwe the green light to export Marange diamonds without further hindrance.
Some Western countries had for long fought to block the exports.
Zimbabwe stands to earn more than US$2 billion from the three mines annually.
The country has potential to satisfy more than 25 percent of global diamond demand.
Meanwhile, Mbada Diamonds last Wednesday donated blankets, clothes and foodstuffs to Isheanesu Home for the Disabled in Harare’s Glen View suburb.
The donation, handed over by the company’s chief administration officer, Patience Khumalo, is part of the firm’s corporate social responsibility programme.
Thursday, November 24, 2011
To reduce import of rough diamonds to maximise gain from exports.
Amid tight global economic conditions and weakening Indian rupee, the diamond industry in India seems to be doing a balancing act by limiting the imports of rough diamonds and clearing inventories of polished diamonds in overseas markets so as to cash-in from the appreciation of the US greenback.
Indian Rupee had fallen to its record low levels earlier this week at Rs 52.73 against a US dollar. The Indian currency has seen its sharpest fall against dollar over the past three months. This prompted diamantaires in Surat, India's diamond hub to consider reducing imports and make all efforts to clear the existing inventories take maximum benefit from the currency fluctuations.
However, industry players maintained that it would be a tough task to sell a luxury commodity like diamond in the major markets including the US and Europe, which are already ailing due to debt crisis.
"Raw material purchased about three months back was cheaper by at least 5-7 per cent than the current prices, thanks to appreciation of dollar against Indian rupee. It is favourable for those who have made stock of rough diamonds. However, selling in the overseas markets is going to be a tough task especially when two major markets of US and Europe are in bad shape," said Pravin Nanavati, a diamond industry expert and former president of Surat Diamond Association (SDA).
Meanwhile, high import prices of rough stones and labour cost has escalated the overall cost for diamond industry since the second quarter (July to September). Also export demand remained dull due to weakness in the overseas markets.
This was reflected as export realisations from cut and polished diamonds during April to October 2011 stood at US $ 15195.08 million (approx. Rs 69,612.63 crore), which showed a growth of about 2.62 per cent from US $ 14807.71 million (approx. Rs 67,906.68 crore) in the same period last year.
The data from Gems and Jewellery Export Promotion Council (GJEPC) revealed that export realisations from cut and polished diamonds during April to June 2011 stood at US $ 6501.27 million (approx. Rs 29071.61 crore), which showed a growth of about 9.77 per cent from US $ 5922.77 million (approx. Rs 67906.68 crore) in the same period in 2010-11.
It is evident from the fact that export realisations during April to September 2011 recorded a growth of 4.39 per cent over last year at US $ 13295.73 million (approx. Rs 60258.74 crore) from US $ 12736.61 million (approx. Rs 58707.90 crore) in the same period last year.
Industry insiders maintained that firms are flush with orders at present until Christmas. However, uncertainty looms for the demand in February-March, for which purchases of raw material has to be made in November-December.
"Exporters are maintaining a balance between imports and exports. Most of the big players are doing natural hedging by managing their rough diamond inventories," informed a senior official of C Mahendra Exports Ltd.
Meanwhile, industry insiders maintained that domestic demand is strong and sales would continue to grow despite economic uncertainty. Good demand is likely to start coming up from countries in Far East and Middle East regions during the Christmas-New Year season. "Purchases are being made and local demand would be strong even after the current marriage season. Therefore, we see no impact of currency fluctuations on diamond prices or demand," said Aagam Sanghvi, director at Sanghvi Exports.
"Situation may not be so bad but it is not so rosy either. Things may get normal only if we see some stability in US dollar. It takes about three months for importing a rough stone and turn it into a polished diamond and export it. Now, with dollar being at record high levels against rupee, diamantaires are maintaining a wait and watch," added Nanavati.
Zimbabwean Finance Minister Tendai Biti on Thursday presented Parliament with a 2012 budget of US$4 billion budget, US$600 million of which he said would be funded with revenues from the sale of diamonds from the controversial Marange field.
Biti told Parliament he had initially drafted a US$3.4 billion budget but in the aftermath of a recent Kimberley Process agreement allowing for the sale of Marange diamonds into Western markets, he increased the scope of the budget to US$4 billion.
The finance minister said his 2012 budget allocates a large share of resources to health, education, water and sanitation, and the struggling agricultural sector.
Biti said the budget is based on the assumption of 9.4% economic growth in 2012 driven by the mining and agriculture sectors. He said it includes measures to help companies outside the Harare capital area, create jobs and empower Zimbabwean youth.
The budget sets aside US$800 million for capital improvements in energy and power and for road restoration and reservoir construction. It includes funds for the constitutional referendum and national census to be conducted next year, he said.
The finance minister said customs duties will continue to be levied on maize meal and cooking oil. Such duties were restored this year to protect domestic producers. Biti said some unscrupulous businesses raised prices after the duties were restored, but he said local producers have now been able to step up production to meet national needs.
Addressing the political context, Biti warned that the budget can't achieve its objectives in an environment of political discord, calling for peace and unity in the country
Economist Tony Hawkins of the University of Zimbabwe voiced the concern that Harare is overspending and might fail to achieve its fiscal targets.
Callisto Jokonya, a former president of the Confederation of Zimbabwe Industry, said he believes the 9.4% rate of growth projected for next year is realistic.
Economist Prosper Chitambara of the Labor and Economic Development Research Institute said the budget rightly addresses social needs in education and health.
Bulawayo based economist Eric Bloch said the budget has positives and negatives.
Wednesday, November 23, 2011
Prices down by up to 50 percent
Debswana has embarked on a cost saving and re-prioritisation exercise to mitigate the effects of the current market volatility, deteriorating global economic conditions and a decrease in both demand and prices of rough diamonds experienced in the past few weeks.
According to a statement by Debswana’s Group Manager- Corporate and Public Affairs, Esther Kanaimba-Senai, the trading of rough diamonds in the secondary market has been very depressed. As a result tenders and auction prices have reduced by 20-50%. She states that, “following the rapid price growth of rough diamonds earlier in 2011 by over 45%, the situation in the market has become more challenging in recent months with lower volumes of diamonds being traded, rough and polished prices sliding and liquidity problems being felt in the cutting centres. The reduction in polished prices has dropped to less 10% and lack of liquidity has meant that rough sales and rough prices have been under pressure”.
As a result, she notes that there is a limited amount of cash available for expert diamond cutters and polishers to make purchases.
This situation has resulted in substantially reduced rough diamond sales during the 2011 selling period which ended on 3 November 2011 and the last sight for the year is projected to be small either. The first sights of 2012 will also be impacted until the Christmas sales figures are known.
In spite of these challenges, consumers have continued to buy diamond jewellery throughput the year, with particularly strong sales in India and China and better than expected performance in the US. However, if the Christmas sales figures are revealed before end of February 2012 then things may return to normal.
According to Motswedi securities research analyst Garry Juma it is quite difficult to predict on the timeframe for more positive conditions. Juma said, “looking at the euro zone debt crisis there will be decline in mineral revenues which forms the bulk of government’s total revenues”.
In his State of the Nation address recently, President Ian Khama noted that the largest contributor to Botswana’s turnaround has been recovery in the mining sector. The turnaround, was “especially in the global demand for diamonds, which registered a positive growth of 23% in the second quarter of 2011,” Khama noted, adding that the economic outlook for 2011 is positive, with growth forecast at 5.7% in 2011 and 7.1% in 2012.
Tuesday, November 22, 2011
There is nothing intrinsically valuable about diamonds. The fact that we think of them as precious is mostly thanks to South Africa’s Oppenheimer dynasty. It is they who, with a bit of help from an American advertising man, sprinkled the rocks with romance and convinced the world that diamonds are forever.
Which is exactly why the family’s exit from the diamond industry is all the more surprising. Africa’s second-richest family, after Nigerian food and cement tycoon Aliko Dangote, sold their 40% stake in De Beers to Anglo American this month for US$5.1-billion.
The decision means the dynasty involved in South Africa’s diamond industry for a century, is finally getting out of the business.
“It was an extraordinarily emotional and difficult thing for us. I think also difficult because the family have been in diamonds since my grandfather came to South Africa in 1902,” current De Beers chairman Nicky Oppenheimer told Reuters.
But stung by the global financial crisis and wrestling with family discord over the direction their investments should take, the Oppenheimers have sold out to preserve their fortune.
The family insist they still take decisions as one and say they plan to invest “a large part” of the proceeds in Africa. One banker familiar with the matter said the family was already in talks to start another joint-venture private equity fund, similar to the US$300-million fund set up with Singapore’s Temasek Holdings in August.
The odds are good that a big chunk of the US$5.1-billion will be reinvested in Africa. Over the past four years the family’s investment arm E. Oppenheimer & Son has begun concentrating more on African investments outside the diamond industry — healthcare, agriculture, media, retail — at the instigation of heir-to-be Jonathan Oppenheimer. The family will maintain a stake of just under two percent in Anglo American as well as other investments such as a private equity business investing in mid-sized South African companies.
WEALTH UNDER PRESSURE
Headed by Nicky Oppenheimer, the clan is South Africa’s equivalent of the Rockefellers. The family mansion in Johannesburg — the gardens are open to the public and require the services of 45 gardeners — has housed generation after generation since 1922.
Critics say the Oppenheimers benefitted under apartheid but Harry Oppenheimer, who was De Beers’ chairman for 27 years, was hated by many in the white political elite and ordinary Afrikaners, not least because he supported the creation of black trade unions, provided housing for black employees and encouraged education.
When former British Prime Minister Harold Macmillan made his “Winds of Change” speech in South Africa’s whites-only parliament in 1960, drawing the wrath of the apartheid government, he was a guest at the Oppenheimer home.
The family had long rebuffed informal approaches from Anglo for its share of De Beers. But when Chairman John Parker tried again in September, he found Nicky Oppenheimer more receptive.
The shift is a reflection of several pressures on the family, not least turbulence in financial markets and recession clouds on the horizon. That worried some in the family — particularly Nicky’s sister Mary Slack, according to mining industry sources — who had already seen the Oppenheimers’ net worth tumble during the 2008 crisis.
The family had to pump millions into De Beers, which was forced to tap shareholders as diamond prices crashed. “They had to put US$400-million in cash into De Beers, which they didn’t have. And they had to borrow that money against their stake in Anglo American,” said one source familiar with the family.
The family was in a bind. The stake in De Beers lost value and the family holdings outside De Beers were tied up largely in private equity, where exiting with a profit was years away.
This sparked some family members, led by Slack — who has equal voting rights in the family — to question the Oppenheimers’ continued involvement in De Beers.
“She would have been observing this (financial crisis) and seeing their wealth really decimated. She was very uncomfortable with where everything was going,” said the source.
Peter Major, mining analyst at Cadiz Corporate Solutions in Cape Town, said he believes Slack had considerable sway over the decision to exit De Beers.
“Mary’s view must have been the deciding factor in selling De Beers to Anglos. Without a doubt. It would then have been quite easy for Nicky to make the decision once he saw how Mary weighed in.”
Though diamonds have been among the best performing commodities this year, sales have been hit by the global slowdown and fears over the eurozone’s debt crisis. There is no single marketplace for diamonds and pricing complex and opaque.
De Beers told investors in July that rough diamond prices increased by around 35% in the first six months of the year. The company has not disclosed exact price performance since then, but has said prices have plateaued in recent months.
De Beers sells the bulk of its gems on what are essentially long-term contracts, meaning it tends to feel market volatility less.
But other gem producers have seen steeper drops – small cap miner Firestone Diamonds said in mid-September that prices had fallen 15-20% from the start of August as demand softened.
For De Beers, having Anglo American as a major shareholder in the current global financial climate would be preferable, one source close to the group said.
“While one will miss the Oppenheimer involvement, there is a strengthening of shareholders. Anglo has been an amazing shareholder in the recession,” that source said.
De Beers has been battling a pile of debt for much of the past decade. Net interest bearing debt was US$3.2-billion at the end of 2009 and US$1.76-billion at the end of 2010 compared to 2000 when it had a net cash position of US$1.35-billion.
WHO TAKES OVER?
One of the most intriguing factors behind the decision to sell is the issue of succession planning — tough for any family business and even more so for the Oppenheimer’s multi-billion pound empire.
Nicky Oppenheimer’s heir-elect is his 42-year-old only son Jonathan, educated at Christ Church, Oxford — like his father and grandfather — and a 20-year veteran of several De Beers departments.
“Jonathan will certainly lead this process,” Oppenheimer senior said. “I am after all 66, while I am active and not retired, he is the man that is going to do the business.”
But Nicky’s choice, industry sources say, has not gone unchallenged, particularly after Anglo American turned Jonathan down for a board position after his father’s departure and closed what is usually the route to the De Beers chairmanship.
Anglo has an effective veto over the chairman’s position.
Jonathan, his critics say, is less well-liked than his father, while others question his ability to lead the firm.
One diamond industry source described Nicky Oppenheimer as “totally blind” to his son’s shortcomings and said others in the family were unlikely to let him take the reins.
Nicky Oppenheimer declined to give details of the family discussions but said the sale was a decision taken unanimously and the family would continue to manage its wealth actively.
“No doubt everybody is around speculating about what went on or didn’t go on. We as a family act together and Mary is extremely supportive of the process of finding new business to do,” Oppenheimer said in an interview.
“None of us are the sort of people who think you should bury your talents in the ground.”
Cadiz’s Major said Jonathan is unlikely to feel as attached to the diamond industry as his forebears.
“Why should he have the same passion and vision and desire that they did? Let alone the connections and gravitas. Are Steve Job’s and Bill Gates’ kids dying to take over the reins of Apple and Microsoft? Hell no.”
But the issue will be a key topic for the family to resolve over the coming months, as it waits for the Anglo acquisition to complete and the cash to land in family coffers.
“Clearly we have a bias toward Africa, we are based in South Africa so we will be looking for opportunities here. We are looking for opportunities in Botswana where we have good connections and then elsewhere in Africa,” Oppenheimer said.
A banker close to the family said the Oppenheimers are in talks with an Africa-focused entity to set up another joint venture worth about US$300-million.
“It’s not about optics. Africa is growing at 6% per annum. It makes good economic sense,” he said.
Monday, November 21, 2011
Our Mines minister, the rich Cde Obert Mpofu, self-proclaimed “obedient son” of President Robert Mugabe, is an amazing fellow.
He wants Zimbabwe’s shoestring budget to finance the policing of the 1 700km Zimbabwe-Mozambique border in order to stop what he admits is massive smuggling of diamonds from Marange into Mozambique and Zambia.
Such an undertaking would require perhaps a whole battalion of soldiers and/or policemen at a staggering cost. What I find ridiculous about this Mpofu submission is the logic behind it.
The simple question a basic mind would be quick to ask is why anyone would want to sent battalions to man a 1 700km stretch to plug pilferage of diamonds out of a diamond field already teeming with armed military men, sniffer dogs, mounted horses, razor wire, cameras – you name it?
Why should we still have “massive smuggling” of the precious stones when we already have such tight security, Cde Mpofu?
Who is doing the “massive smuggling”? Are we still talking about the common thief here or is it a case of “official plunder” that the minister and government have vehemently denied?
Zimbabwe got the Kimberley Process (KP) green light to trade in diamonds after Mpofu did a sterling job of convincing the KP that reports of massive looting involving top government and security officials were all Anglo-Saxon lies.
Yet Mpofu told a Parliamentary pre-budget seminar in Victoria Falls two weeks ago he was disturbed by the magnitude of the smuggling.
To illustrate the enormity of the plunder, the minister said he was shocked when Zambia and Mozambique allegedly sought to join the international trade watchdog scheme, the KP, despite not having diamond deposits of their own.
“When I was in the DRC last week, Zambia and Mozambique said they wanted to join the KPCS (Kimberley Process Certification Scheme), but they don’t have any information that they have diamonds. But we have information that a lot of our diamonds went through these countries.
“There are massive leakages at the border posts, but policing of the border is not the responsibility of the Mines ministry. We believe our diamonds are being clandestinely smuggled out of the country,” Mpofu said.
Instead of focusing on plugging the obvious leaks at the diamond fields, Mpofu said he wanted government to install modern scanning machinery at the country’s border posts to reduce the smuggling.
No concerns have been raised about reports that private jets of wealthy Chinese, Indian and other nationals with the necessary connections, land at Harare International Airport to pick up diamonds mined from Marange with payments for the loot done offshore. No paper trail is left behind, making it impossible to trace the illegal exports.
But we must deploy hundreds of foot soldiers and policemen to patrol the border as evidence of government desire to stop smuggling! Meanwhile, the minister was ecstatic about Zimbabwe’s final victory in the war to have our stones declared clean.
“This is a historical development we all had been waiting for,” Mpofu said upon his return from the DRC.
“We want to shock and shake the world. We are going to unleash our worthiness to the world and Zimbabwe will not beg for anything from anybody again.
I am instructing diamond mines in Marange to ratchet their operations and sell in a big way. It is not a secret that Zimbabwe has the largest diamond reserves in the world.
Our sovereign rights to trade in our diamonds had been unjustifiably denied by participants with hostile foreign policies on Zimbabwe.”
Should we then assume the systematic looting that has allegedly been taking place will be stopped now that we can sell our diamonds on the open market?
The fact that has obtained at our diamond fields is that there are serious governance failings – almost deliberate – with regard to securing the area.
Instead of suggesting a 1 700km human wall along a far-off border, government should have long secured the area by more foolproof measures.
The nature of some of the failures to do so makes it appear a deliberate effort to keep Chiadzwa open for smuggling.
The various violent programmes put in place, ostensibly to plug diamond pilferage, failed because they were never meant to stop the real “official mass plunder”.
Other than hurting the small, insignificant bare-hand diamond digger, how far could such brutal programmes as Operation Chikorokoza Chapera, Operation Restore Order, Operation Hakudzokwi and Operation Wakazviwanepi have been expected to stop the illegal airlifting of diamonds from the diamond mines or from the airport in Harare?
This business of border patrols simply makes no sense given the kind of security already in place at Chiadzwa against the magnitude of the diamond plunder that Minister Mpofu acknowledges has reached scales where non-diamond producing countries are seeking licences to trade in the stones although they have no diamond mines.
Seeking to seal the country’s borders with a human fence in order to stop theft at a localised diamond field does not sound very logical, Comrade Minister.
Sunday, November 20, 2011
Neiman Marcus will be carrying Forevermark diamonds in 10 of its stores beginning this week, the US retailer announced on Friday. Three Forevermark Collections were created exclusively for Neiman Marcus as part of the US launch of the Forevermark diamond brand this fall.
The Forevermark Collection hand-made exclusively for Neiman Marcus is focused around the Forevermark diamond's unique and precious qualities, evoking an Art Deco bespoke design with a Forevermark diamond and icon at the center of each piece.
The 16-piece diamond jewelry collection comprised of rings, necklaces and earrings – all set in 18 karat white gold - was created by designer Maria Canale.
"We are proud to welcome Forevermark into the Neiman Marcus stores and look forward to offering our customers an opportunity to experience our exclusive diamond collection featuring Forevermark diamonds," said Ann Stordahl, Senior Vice President, General Merchandise Manager, Precious Jewelry.
Thursday, November 17, 2011
London-based jeweler Laurence Graff paid nearly $4 million to buy back a white diamond ring of his own creation at a sale where wealthy investors seeking alternative assets snapped up top-quality gems, Christie's said on Thursday.
Graff, whom close associates said was in China this week, made the winning bid by telephone to the semi-annual jewelry sales in Geneva on Wednesday night, the auction house said.
"He bought it back and he will sell it a second time," Jean-Marc Lunel, head of Christie's jewelry department in Geneva who conducted the sale, told Reuters.
"He is the King of Diamonds and recognizes his babies. The stone is fabulous and in great shape in terms of cut, color and clarity," he added.
The oval-shaped diamond, weighing 24.30 carats, is graded 'D' color and potentially internally flawless if repolished slightly on the surface, according to Lunel.
It was put on the block by an unidentified woman and had a pre-sale estimate of $2.9 million-$3.5 million, according to the catalog.
Christie's, owned by French billionaire Francois Pinault, netted 56.26 million Swiss francs ($61.37 million) from the event, with 77 percent of the 361 lots on offer sold, it said in a statement.
A gray diamond weighing 10.67 carats, which had been estimated at $120,000-200,000, soared to $1.19 million, a world record price for a gray diamond, according to Lunel. Earrings made of pear-shaped Colombian emeralds and diamonds fetched $3.078 million, also a record price at auction, he said.
"What is in the mid-range or not so attractive doesn't sell well. But what is exceptional sells at astronomical prices -- colorless diamonds, colored diamonds and colored gems including rubies from Burma (Myanmar)," Lunel said.
"There are more and more private collectors, clients looking for new investments. They are looking for top, top quality gem stones, to put their money into something that will not melt," he said.
Graff, who often attends auctions, is a self-made diamond merchant who became one of Britain's richest men with an estimated worth of around 2 billion pounds ($3.2 billion).
Graff Diamonds plans to raise about $1 billion in a Hong Kong listing next year, a move to fund further expansion in Asia and capitalize on booming demand for high-end gems in China and India.
"I think it is a clever move because he is number one today. He still has room to expand everywhere," Eric Valdieu, a jewelry expert formerly with Christie's who has launched an investment fund "Divine Jewels", told Reuters.
"It is a very expensive business. Therefore, if he wants to go faster he needs large financial support," he said.
Graff's glittering stores sit on the world's most exclusive shopping streets, including the posh rue du Rhone in Geneva.
"When I see his inventory, the quality of his merchandise, the beauty of his shops, how cleverly everything is run, I can only suggest to people to go for it -- if people want to invest with a retailer," Valdieu said.
"They are investing with someone who knows what he's doing," the Frenchman added.
Rival Sotheby's sold the "Sun-Drop Diamond", a huge yellow diamond weighing 110.03 carats for $12.36 million, a world record for a yellow diamond, in Geneva on Tuesday night.
Wednesday, November 16, 2011
Armenia's diamond-cutting industry is emerging from the crisis, Economy Minister Tigran Davtyan said today.
"The global economic crisis had seriously affected our diamond-cutting plants, which suffered serious losses, but now we are able to get out of the crisis, and I guess that by the end of this year we will be able to increase the volume of exports compared to previous, pre-crisis years,’» Davtyan said when visiting Arevak and Lori diamond-cutting companies in central Kotayk province.
Davtyan said an agreement was reached with the Russian diamond producer Alrosa, which currently supplies raw materials to about 10 Armenian diamond companies.
Lori diamond processing company receives raw diamonds from Alrosa, with which it has been cooperating since 2007. In the first ten months of 2011 it reported a 57.7% decline over the same period last year. Other figures were not available. The company's entire output was exported. It employs 121 people whose average monthly salary is 128,000 drams.
Arevak company also receives raw diamonds from Alrosa. It has 126 people on its payroll whose average monthly salary is 106,000 drams. During the first 10 months of 2011 its output increased by 42.7% and all was exported. Other figures were not available.
According to the National Statistical Service of Armenia, in January-September 2011 Armenian diamond-cutting plants produced 51,500 carats of dimoand, by 8.3% more from a year earlier.
The United Arab Emirates, the world's fourth-largest oil exporter and home to gold trading hub Dubai, is rapidly becoming a force in trade of another highly valuable commodity: diamonds.
Dubai, the UAE's center for gem trade, handled $35 billion worth of rough and polished diamonds in 2010, a leap from an annual figure of just $3 millhttp://www.blogger.com/img/blank.gifion a decade ago, according to Malcolm Wall Morris, chief executive of the Dubai Multi Commodities Center (DMCC).
In the first half of this year Dubai traded $25.3 billion, a 55 percent increase from the same period a year earlier. Much or most of the rise was due to surging diamond prices rather than growing volumes -- but the increase nevertheless underlined Dubai's success in competing with other trading centers.
"Part of the UAE's policy is to diversify its income and gradually move away from one or a few sources of income," UAE Economy Minister Sultan bin Saeed al-Mansouri told Reuters on the sidelines of a diamond exhibition in Dubai. "So there must be manufacturing and other sources of income we can depend on and that are also sustainable."
The DMCC, which provides the infrastructure for commodities trade in Dubai, now ranks the emirate as the world's fourth largest diamond trading hub, behind Antwerp, New York and Mumbai. Antwerp, through which more than half of the world's diamond production passes, saw $48 billion of trade in the first ten months of 2010, according to data from the Antwerp World Diamond Center.
The UAE has competed with traditional diamond centers by keeping customs duties for diamond jewelry as low as 1 percent, a tiny fee compared to major diamond producer Russia's 23 percent duty and 18 percent value added tax, according to Maximilian Artsinovich, founder of London-based retailer Maximilian Jewelry.
"Because of these duties, jewelry and imported watches in the Ukraine, Russia and Khazakhistan cost double their price in Dubai, or are at least 50 percent more expensive," Artsinovich said after opening a boutique in Dubai.
The UAE also tightly regulates the quality of diamonds coming in and out of the country to increase investor confidence, says the DMCC.
But some traders still question Dubai's ability to rival more established centers. A major obstacle keeping Dubai from becoming one of the world's top three hubs, according to Mitesh Surti of Antwerp-based diamond seller Beyroha, is local banks' lack of expertise in the diamond industry. Diamond traders have had difficulty setting up accounts with services catering to the industry, such as overdraft facilities, he said.
Another problem is the UAE's inability to attract Israeli jewelers, who play a prominent role in the industry; for political reasons, Israeli nationals are generally not allowed into the country.
"A lot of Israelis cannot come here, and that's a major problem because they are (one of) the industry's main pillars. In Antwerp that is not a problem," said Surti.
And while much of Dubai's diamond trade comes from shipping the precious gem abroad, traders say the emirate's reliance on tourists rather than the local market for most of its retail sales is a weakness.
Saurabh Shah, a seller at Antwerp-based diamond manufacturer Rosy Blue's Dubai arm, said that if tourism in the UAE falls, diamond sales also drop because Arab locals and the large Arab and Indian expatriate communities traditionally prefer to buy gold.
"For Dubai, sales are mostly from the tourists. Indians (living here) buy only gold jewelry, and locals don't buy diamonds very often," said Shah.
Demand for diamonds in the Gulf is rising, however, and today stands at $15 billion annually compared to around $2 billion a decade ago, Shah said. By 2015, China, India and the Gulf could overtake the United States as top diamond consumers, analysts believe, creating more opportunities for Dubai, which is located between diamond producers in Africa and processors and buyers in Asia.
"Dubai is not rivaling Antwerp -- Dubai is taking a new spot," said Victor van der Kwast, chief executive of ABN AMRO Bank's international diamond and jewelry group. Commodities flowing from Africa to China naturally tend to move through Dubai for geographical reasons rather than Antwerp, he said.
While Mumbai has a long tradition of diamond cutting and polishing, Dubai hopes to control more of the industry's supply chain by processing rough diamonds domestically rather than sending them to Mumbai and then re-importing the finished product into the UAE for retail sale.
"Eventually, that's one of the aims. Dubai will try to do as much of the diamond processing as possible," said DMCC business director James Bernard.
The DMCC has a diamond boiling center, which removes dirt and trace materials from the gemstones, and a light jewelry manufacturing center. But some traders think bypassing Mumbai, which processes seven in every 10 of the world's diamonds, will not be possible on a mass scale because of labor costs.
"Manufacturing diamonds needs different skills and a labor force, and the labor which is in India is more economical," said Amit Dhamani, chief executive of Dubai-based jeweller Dhamani.
But he acknowledged Dubai's potential in processing high-end products at lower volumes. "More processing in terms of high-end cutting of diamonds can be an interesting point -- that is more quality-oriented, in that labor is not a major factor."
Economy Minister Mansouri was adamant that Dubai could incorporate manufacturing into its diamond industry.
"We are confident that Dubai can be number one in a variety of sectors, including attracting investors and in areas like polishing diamonds and manufacturing diamonds," Mansouri said. "Dubai does not know the impossible."
Tuesday, November 15, 2011
The world’s largest known yellow diamond has been sold at auction for over $10.9 million.
Auction house Sotheby’s had estimated that the pear-shaped Sun-Drop Diamond would fetch between $11 million and $15 million at auction Tuesday in Geneva.
It was bought by a telephone bidder.
The diamond was sold by New York-based company Cora International, which discovered the jewel in South Africa last year.
Gemologists rate the 110.3 carats diamond as fancy vivid yellow — the highest possible color grading.
The color in yellow diamonds is caused by nitrogen impurities trapped within carbon molecules and hardened over the course of millions of years.
The sales price doesn’t include the auctioneer’s commission and any taxes the buyer might have to pay.
Monday, November 14, 2011
Coloured diamonds speak of a luxury that’s rare and unparalleled. The Hope Diamond that’s a natural blue diamond or the 185-carat natural pink Darya-i-Nur, bears testimony to the rare beauty of coloured diamonds. Of late, India is gradually waking up to the trend.
Take, for instance, the line of champagne diamond jewellery launched by Jaipur Gems. Beautifully crafted and set in contrasts with white diamonds, the pieces have found eager takers. Such diamonds, incidentally, come largely from the Argyle mines in Australia and there is a high international demand for it. In hues that range from a light cognac to rich brown, these are marked by their ability to absorb rather than reflect light. They possess a rare sparkle that helps make exquisite pieces of jewellery.
High on the list are black diamonds too, usually found only in Brazil. Scientists speculate that these diamonds may have extra-terrestrial origins, being part of meteorites that fell on the earth. They stand out in another sense too — these are those rare diamonds that do not sparkle. But they nevertheless are stunning when used in jewellery.
“My favourite coloured diamonds are pink, champagne and black. Pink has this romantic fairy tale like feel, whereas black can look very modern and distinctive, and I think champagne diamonds look muted and have this understated elegance,” says jewellery designer Pallavi Foley.
Incidentally, Pallavi holds her favourite to be a black diamond necklace, called Odyssey, she designed. “The necklace romances with the female body, wrapped from the neck to the shoulder, using black and white diamonds to bring out the contrast in the best possible way. The necklace has 4908 diamonds and is set in white gold,” she says.
The flow of Rs 5,000 crore of illicit rough diamonds that enter the country, particularly world's biggest diamond cutting and polishing centre in Surat from Zimbabwe without Kimberley Process (KP) certificates every year, is set to diminish.
"KP's export clearance to Zimbabwe is naturally going to ease our work pressure. It is a difficult task to crack the diamond smuggling racket. We were successful in cracking three cases since 2008. We are confident that the illegal smuggling of diamonds will decrease drastically in the coming days," said a senior revenue intelligence officer.
The diamond smuggling cartels were active for two main reasons: gap in the demand and supply of rough diamonds with depleting productions at the diamond mines across the world and the smuggled goods came 30 per cent cheaper than the price charged for the stones with KP certificates. "Now since import from Zimbabwe will be treated as legal, the diamond cartels are likely to disappear from the scene," said the officer.
Surat was the final destination for the blood diamonds smuggled from African countries. However, authorities concerned have busted rackets and seized three consignment of blood diamonds, each valued above Rs.3 crore or more in the past couple of years. In September 2008, revenue intelligence officials arrested two Lebanese men - Robai Hussain and Yusuf Ossely - with 3,600 carats of rough diamonds worth Rs.3.85 crore. Two blood diamond smuggling cases were reported on April 22, 2011 and August 9,2011. A total of 58,500 carats of blood diamonds worth Rs.14.42 crore were seized and four carriers including a foreign national from Democratic Republic of Congo (DRC) arrested. Prema Patel and Johrabhai Desai were arrested in April with blood diamonds originating from the controversial Marange diamond fields in Zimbabwe. A foreign national Jean Tshimaga and Pravin Ajudia, a resident of Rajkot, were held in August with blood diamonds brought from Congo.
The diamond cartels active in Mumbai and Dubai, employ the carriers from India and foreign countries like Congo, Mozambique, Lebanon etc. to bring the consignment from the African countries into India. Kirti Shah, a leading diamantaire and former municipal corporator, said, "Diamond smuggling activity increased after 2006 when the Marange mine was discovered in Zimbabwe. The illegal diamond consignment was brought to Mumbai via Dubai. The carriers charged anything between 2 and 3 per cent."
Sunday, November 13, 2011
The total volume of diamonds traded in Dubai reached 206.1 million carats in the first half of 2011 alone, a 57% increase on the 131 million carats traded in H1 2010; with values increasing to $25.3 billion from $16.3 billion, according to a press release from the Dubai Multi Commodities Centre.
Dubai’s rough diamond trade in the first six months of 2011 nearly doubled to 108 million carats whilst also exceeding 2010's full year trade of 105.1 million carats.
Export of polished diamonds totaled 46.8 million carats ($9.7 billion), a 40% rise from H1 2010's 33.3 million carats ($6.7 billion); whilst net imports rose to 51.3 million carats ($9.7 billion), up 17% from 43.8 million carats ($6.4 billion). Together, polished diamonds traded 98.1 million carats at a value of $19.4 billion in H1 2011.
DMCC Executive Chairman Ahmed Bin Sulayem said that the record diamond thttp://www.blogger.com/img/blank.gifrading volumes seen in 2011 were a “testimony to Dubai's global standing in the diamond industry. DMCC is proud to have cemented Dubai's place amongst the top three diamond centers in the world.”
"In less than 10 years Dubai has become a top trading center for rough diamonds,” Bin Sulayem added.
Leading diamond company De Beers says it left its operations in Zimbabwe because it discovered that the diamond deposits did not meet the company’s expectations.
But the mining house insists everything was done above board.
This revelation comes at a time when the diamond giant is facing heightening lawsuit threats from the Zimbabwean government.
Zimbabwe's Mining Minister Obert Mpofu said that even though the country has been allowed to export its diamonds by the Kimberley Process, it has facts at its disposal that infer that De Beers, during its 15 years in Zimbabwe, was smuggling precious gems, thereby denying the country of revenue.
Speaking from London, De Beers’ media relations head Lynette Gould said that before De Beers left Zimbabwe it sought an audience with the government and handed over its findings.
Gould said: “The presence of diamonds in the Marange area was first discovered in the period 2001 to 2003 by De Beers during its exploration search for primary deposits.
“The prospecting in the region was concluded by early 2006, with the conclusion that the primary source for such diamonds was not local, and De Beers moved to relinquish its prospecting rights in the region.”
De Beers’ licence for exploring the diamond fields then expired in June 2006. From that point, a company owned by Zanu-PF loyalists, Mbada Diamonds, took over.
Mbada is currently working there in partnership with the Zimbabwe Mining Development Cooperation, a government company.
Ironically, the same year that De Beers left Zimbabwe, key figures in Zanu-PF and the military moved in to monopolise the diamond fields, barring civilians from the diamond rush.
Many lives were lost as the army shot to kill while smuggling took its toll. The Zimbabwean diamonds were then branded blood diamonds.
Gould added that another aspect that made De Beers consider its future in Zimbabwe was that the government had created an environment of uncertainty.
She said: “In addition, the government had created an environment of uncertainty regarding the status and future of the concession.”
Mpofu said there was no way De Beers did not benefit from its stay in Zimbabwe. He said: “They smuggled out millions of dollars worth of gems.
It is just a matter of time before we finish our investigations and take the matter to the international court.”
According to Gould, De Beers had been in Zimbabwe since the early 1990s with a company called De Beers Zimbabwe.
“By way of background, De Beers arrived in Zimbabwe in 1993 and left in 2006, and first prospected in the Marange area in the late 1990s,” she said.
Zimbabwe is pinning its hopes of economic revival on the diamond deposits.
However, analysts and civic groups fear that revenue from the diamonds will only fatten the pockets of the political elite and even fund Zanu-PF’s election terror campaigns.
Thursday, November 10, 2011
She missed last year's show as she was heavily pregnant with her son Flynn.
So Miranda Kerr made sure that her return to the catwalk for Victoria's Secret was going make an impact as she stole the show in a selection of sexy and seductive outfits.
The Australian model left the others in her shade as she showed off three different Angel looks and was given a standing ovation as she strutted out at the end of the show glistening as an ice peacock.
The piece de resistance was the show-stopping $2.5million Fantasy Treasure bra, dripping with yellow diamonds and pearls, which complemented her stunning figure perfectly.
And it prompted her proud actor husband Orlando Bloom to rise from his front row seat and give his wife a standing ovation.
During the Victoria's Secret Fashion Parade, which took place at the Lexington Armoury in New York, Miranda showed off two other outfits which complemented her post-pregnancy figure.
She took to the stage in a purple bra and knickers set which she teamed with a black and white striped scarf round her waist and a medieval looking top which had polka dot chiffon arms.
The second outfit was a red and white lace bra set which she teamed with a red wrap shawl that wrapped her up like a present and devilish red ballerina heeled shoes, looking like something that many men would be keen to find under their Christmas tree.
That she delivered baby Flynn, her son with Orlando Bloom, in January, was impossible to tell as she strutted down the catwalk showing off her slender and toned figure.
She revealed the secret to her success at regaining her figure as Pilates and yoga and revealed: 'I put weights on my ankles and do leg lifts. It burns.'
And her bosom is fuller since giving birth and Miranda cites breast milk as the reason behind her bigger cup and said breastfeeding has also helped her get her figure back, especially for this year's show.
Wednesday, November 9, 2011
Graff Diamonds Ltd., the producer and retailer whose founder twice set records buying gems at auction, plans to raise about $1 billion in an initial public offering in Hong Kong, according to a person with knowledge of the matter.
Graff plans to list next year, said the person, declining to be identified as the information is private. The London-based company, which runs a store in the Peninsula Hotel in Hong Kong, will use the proceeds to increase production, the person said.
The business is following brands such as Prada SpA to Hong Kong, seeking to raise money in a region where demand for luxury goods is accelerating as the European and U.S. economies stall. Sales of luxury items in China such as clothes, handbags, fine jewelry and watches will more than double to about 180 billion yuan ($28 billion) in 2015 from last year, McKinsey & Co. says.
“This is yet another example of a Western brand seeking to list its shares on a Far Eastern stock market where it believes that it will not only achieve a higher valuation but it will also gain good PR in an increasingly important market,” Chris Searle, corporate finance partner at BDO LLP, said by e-mail.
Rothschild is advising Graff on the IPO, the person said. It was reported today by the Financial Times. Graff officials weren’t immediately able to comment when Bloomberg called.
Founder and London jewelry dealer Laurence Graff last year bought a diamond in a Swiss sale for a record auction price of 45.4 million Swiss francs ($50 million). Graff previously paid 16.4 million pounds ($26 million) for the 35.56-carat grayish- blue Wittelsbach Diamond at Christie’s International in London in December 2008, then the highest price for a gem at auction.
China surpassed Japan to become the second-biggest buyer of diamonds behind the U.S., where demand rose 7 percent last year, compared with 25 percent in the communist country, according to De Beers. Supplies of rough diamonds, polished before being set in jewelry, will be flat in the next five years and won’t meet demand driven by China and India, RBC Capital Markets has said.
Chinese purchases of luxury items will make up 20 percent of the world market by 2015, according to McKinsey.
Prada raised $2.5 billion in a Hong Kong offering in June. Coach Inc., the largest U.S. luxury leather goods maker, also plans to list depositary receipts in Hong Kong in late November, a person with knowledge of the matter said last month.
Commodities producers have also sought funds from a region that’s now the world’s growth engine for raw materials demand, with United Co. Rusal Ltd., the largest producer of aluminum, raising HK$16.7 billion ($2.2 billion) in Hong Kong last year.
In an indication that the popularity of Princess Diana has not faded, retailing giant Marks & Spencer has reported that their copy of the Duchess of Cambridge's ring has now become their biggest selling piece of jewellery ever.
The Duchess, who married Prince William in April, received his mother's engagement sapphire and diamond ring when they announced their wedding – 30 years after Diana received the ring from Prince Charles.
Marks & Spencer said that 200 people have bought the 'Platinum plated Royal ring' every week since it went on sale in March.
As a result, over the past seven months, more than 5,500 pieces have been sold.
The ring that the Duchess of Cambridge received is valued at £250,000 ($400,000) – somewhat higher than the cost of the replica at £13.50.
Tuesday, November 8, 2011
Anglo American Plc has agreed to buy the Oppenheimer family’s 40 percent stake in De Beers for $5.1 billion. This deal marks the end of the iconic century-old involvement of the Oppenheimer’s in the diamond industry and giving Anglo as much as an 85 percent stake in the world’s largest diamond company. Undoubtedly this announcement will leave an indelible effect on the industry and clearly signals the “changing of the guard” with many within the close-knit diamond trading industry likening this announcement to the abdication of a monarch.
Whilst the financial analysts begin to postulate about who got the better end of the deal and the diamond market is left to ponder the future direction of their business in a post-Oppenheimer diamond industry, two fundamental issues are already as clear as day. One, the diamond industry is becoming more and more streamlined and two, the diamond industry has just been catapulted onto the radar screen of the professional investment community.
The Anglo stock responded positively to the news today rising almost three percent to £2,390 in intra-day trading and easing back to £2,366 in late afternoon trading ending the day up 1.2 percent. Commenting on the acquisition Cynthia Caroll, Chief Executive of Anglo alluded to the more simplified and integrated ownership structure the deal will bring to De Beers. Notwithstanding the benefits of the simplified structure, the buy-out is a clear and aggressive bullish play on diamonds by one of the world’s leading diversified mining and minerals company. In her announcement to the market, Caroll noted that the deal marks Anglo’s commitment to “an industry with highly attractive long term supply and demand fundamentals” and “captures the potential presented by a rapidly evolving diamond market.”
Beyond the nostalgic sentiments the deal may conjure up for the traditional diamond trading markets around the globe, the news bodes very well for the emerging international investment diamond market. The increased exposure the announcement will provide for investment diamonds in the broader financial market is yet another factor driving the increased awareness of investment diamonds as an outperforming alternative investment asset class. Coupled with its safe-haven characteristics and strong underlying fundamentals, the investment diamond market is set to become a hot topic this Holiday Season with potential capital inflow ready to surpass that of less liquid and transparent tangible assets such as wine and art which themselves have experienced exponential growth over the last few years.
Monday, November 7, 2011
The world's biggest diamond cutting and polishing centre in Surat will also become the biggest centre processing the rough diamonds from Zimbabwe in the next few years. This is because Zimbabwe's Marange diamond field has the annual capacity to produce about $4 billion worth of rough diamonds.
EG Cross, a member from Bulawayo south constituency of Zimbabwe, recently in a detailed presentation to the Zimbabwe House of Assembly stated that mining companies - Mbada Diamonds, Anjin and Marange Resources - have been collectively producing rough diamonds worth $4 billion from Marange diamond field per annum.
Until now, diamantaires in Surat were going by the official production statistic of Zimbabwe government about Marange diamond field which was estimated to be worth $2 billion per annum. The presentation by the member of Zimbabwe parliament has made the diamantaires in Surat happy.
Cross stated that the Marange diamond field produced 15 per cent good quality gem stones and 85 per cent industrial diamonds. The average price achieved on gem stones was $350 per carat in 2010, while industrial diamonds realised between $31 and $3 per carat.
Industry experts said the statement of the member of Zimbabwe House of Assembly has heated up the market in the diamond city. Surat is the biggest consumer of Zimbabwe diamonds and about 90 per cent of the $4 billion worth of rough diamonds would arrive in Surat every year.
"Till now, we were under the impression that Marange diamond field has an annual production capacity of $2 billion worth of rough diamonds. The recent statement by a senior member of Zimbabwe parliament has revealed the actual production figure of Marange, which is quite huge," said Ashit Mehta, chairman, Surat Rough Diamond Sourcing India Limited (SRDSIL).
The annual demand of rough diamonds in the industry is estimated between $10 and $11 billion per annum. As per the Gems and Jewellery Export Promotion Council (GJEPC) statistics, India imported $11 billion worth of rough diamonds in 2010-11.
"This year, the total import of rough diamonds is likely to increase following Kimberley Process Certification Scheme's export clearance to Zimbabwe," said Mehta.
Sunday, November 6, 2011
South Africa’s Oppenheimer dynasty has ended a century in the diamond business which shaped the region, selling its 40 per cent of De Beers to global miner Anglo American for $US5.1 billion ($4.9 billion) on Friday.
The historic deal will end the involvement of the Oppenheimer family in De Beers, and will take Anglo American’s stake to up to 85 per cent.
The government of Botswana owns the remaining 15 per cent of De Beers and has an option to lift this to 25 per cent.
‘‘This transaction is a unique opportunity for Anglo American to consolidate control of the world’s leading diamond company - De Beers,’’ chief executive Cynthia Carroll said. ‘‘Today’s announcement marks our commitment to an industry with highly attractive long term supply and demand fundamentals.’’
Nicky Oppenheimer, representing the Oppenheimer interests, said that the agreement had been ‘‘difficult’’ for the family to reach.
‘‘This has been a momentous and difficult decision as my family has been in the diamond industry for more than 100 years and part of De Beers for over 80 years,’’ Nicky Oppenheimer said in the statement. ‘‘After careful and deliberate consideration of the offer, and what is in the best interests of the family, we unanimously agreed to accept Anglo American’s offer.
Nicky Oppenheimer heads South Africa’s richest family, whose $US7-billion fortune makes him the 136th richest person in the world, according to Forbes magazine.
De Beers is a global leader in the exploration, mining and marketing of diamonds. Cecil Rhodes, the colonial-era politician and mining tycoon, founded De Beers in 1888. His fortune financed his imperial adventures for Britain, founding the state of Rhodesia which later became modern Zambia and Zimbabwe.
In the early 1900s, Ernest Oppenheimer began buying up mining interests in neighbouring Namibia (then still South West Africa), with American backing.
In 1917 he formed the Anglo American Corporation and by 1920 his Consolidated Diamond Mines had become a force in the mining industry.
By the end of that decade, he had taken control of De Beers Consolidated Mines, and his control of the diamond industry had begun.
His shrewdest move was to establish a central selling organisation that would stabilise sales and keep prices at a premium - a system which exists to this day and which has allowed De Beers to maintain its tight grip on the precious gem business.
Ernest’s successor Harry Oppenheimer became a prominent opponent of South African apartheid, before handing the reins to Nicky.Carroll said: ‘‘Anglo American is the natural home for our stake as they have been major shareholders in De Beers since 1926 and have a deep knowledge of the diamond business.
She noted that De Beers’ management had steered the group through the global financial crisis, adding it was in a ‘‘stable position’’ and was ‘‘well placed’’ for future growth.
Officially headquartered in Luxembourg, the firm, the world’s biggest diamond company, is run from London and Johannesburg. The company still has a major mining operation at Kimberley, South Africa, where the first discoveries were made more than a century ago.
Last year the company had profits of $546 million on sales of $5.9 billion dollars in 2010.
In September, De Beers signed a 10-year deal with Botswana - the world’s biggest diamond producer - that will move the company’s rough stone sorting and trading division from London to Gaborone.
The agreement is the longest sales contract ever agreed between the two partners, giving a security of supply that Carroll cited as a key element behind the deal.
Thursday, November 3, 2011
The Surat Rough Diamond Sourcing India Limited (SRDSIL), a consortium of 1,500 diamantaires that had been lying dormant since its inception in August 2011, sprang to life after the international diamond watchdog, Kimberley Process Certification Scheme (KPCS), cleared the export of rough diamonds from two mining sites in Zimbabwe's Marange diamond field. SRDSIL office-bearers will visit Zimbabwe in the third week of November to revive the rough diamond deal with Zimbabwe Diamond Consortium (ZDC).
In October-2010, SRDSIL and ZDC had signed a deal for the supply of $1.2 billion worth of rough diamonds from Marange diamond field in exchange for training its 1,000 unemployed youths in diamond cutting and polishing. But, the deal was put on the backburner after the KPCS's plenary meeting in Israel in November banned the export of rough diamonds from Zimbabwe's controversial Marange diamond field.
Industry sources said the direct sourcing of rough diamonds from Zimbabwe and Russia by SRDSIL is going to benefit the small and medium diamantaires who will be able to purchase rough diamonds through an auction in Surat without going to Antwerp and thereby reducing the role of the diamond brokers.
Some of the SRDSIL office-bearers met in Antwerp on Wednesday under the leadership of their chairman, Ashit Mehta, immediately after the KPCS's approval to Zimbabwe for exporting rough diamonds.
Speaking to TOI from Antwerp, Ashit Mehta said, "The diamond consortium has got back its lost sparkle following KP's decision on Zimbabwe. We are planning to import the first shipment of rough diamonds from Zimbabwe as soon as possible."
"The diamond consortium's foundation was laid keeping in mind the huge stockpile of rough diamonds with Zimbabwe worth $5 billion. Only Surat has the potential to process Zimbabwe diamonds and thus the consortium is looking to import majority of the diamond produced in Zimbabwe," said Mehta.
Mehta said a day prior to the KP development in Kinshasa, the SRDSIL got an invitation from Alrosa Limited, a state owned diamond giant in Russia, for discussing the long term contract of supplying rough diamonds.
"Six of our SRDSIL directors are going to Russia next week where we probably plan to seal a long term contract for rough diamonds supplies from Alrosa. After that we plan to fly to Zimbabwe to work out the $1.2 billion deal, so that we can hold first official rough diamond auction in Surat sometime in December," said Mehta.