Monday, February 28, 2011

2011 Academy Awards Diamond Delights

The Academy Awards red carpet is where some of the most famous celebrities in the word unveil some of the most famous diamond jewelries in the word to the public, and this year was no different. With stars and starlets clad in tuxes and designer gowns and bejeweled from head to toe, the red carpet entrance was quite a site to see.

This year, the clear diamond stars of the red carpet were brunette Beauty Anne Hathaway, red head Amy Adams and graying Helen Mirren, all three of whom who turned countless heads with their stunning selection of diamond accessories.

Anne Hathaway wowed onlookers when she sauntered down the red carpet a deep red, strapless, vintage dress designed by Valentino and posed on the red carpet for a photo op with Valentino himself.

To ornament her exposed neckline Hathaway chose a 10$ million Tiffany Lucida Star Diamond necklace, set with a total of 94 carats of diamonds. She paired the necklace with 10-carat diamond earrings, also from Tiffany, valued at $60,000 and a 5ct diamond ring, valued at $213,000.

Amy Adams chose a dazzling deep midnight blue L’Wren Scott sequined gown to compliment her fair skin. She paired the dress with an emerald and pearl necklace and a stunning Cartier platinum houte joaillarie secret watch bracelet set with several rows of colorless diamonds and featuring a large carved emerald watch face in the center. The bracelet is valued at a whopping $1.025 million.

Helen Mirren was nearly all Cartier, wearing a form-fitting silk gray gown designed by Vivienne Westwood in collaboration with Cartier jewels. She complimented the classic shape and color of the dress with a vintage platinum necklace from 1907 that was set with pearls and diamonds, and a large platinum and diamond bracelet from Cartier’s Archive Museum Collection.

Sunday, February 27, 2011

Mouawad unveils $3.8 million diamond purse

The renowned UAE-based jewellery house Mouawad has unveiled the world’s most valuable purse, ‘The Mouawad 1001 Nights Diamond Purse’ worth $3.8 million.

It will be on display to the public in the Mouawad Store at the Dubai Mall until today (February 27).

Taking its inspiration from one of the world’s most epic tales of romance, intrigue and fantasy, the heart-shaped purse, handcrafted from 18kt gold, incorporates 4,517 diamonds (105 yellow, 56 pink and 4,356 colourless) with a total weight of 381.92 carats.

This bejeweled purse was designed by the renowned Robert Mouawad and hand crafted by ten skilled artisans working for a total of 8,800 hours.

The handbag recently received official certification from the Guinness World Records as the most valuable handbag in the world.

“Just as the tales of Scheherazade have captivated readers with their intricately woven plots of uninhibited passion and daring, so ‘The Mouawad 1001 Nights Diamond Purse’ is designed to mesmerise with its lavish attention to detail and elaborate workmanship incorporating thousands of diamonds,” said Pascal Mouawad, co-guardian of the House of Mouawad.

“The Mouawad 1001 Nights Diamond Purse” is the second record-breaking creation from the House of Mouawad, following in the footsteps of “The Very Sexy Fantasy Bra” valued at $11 million produced in collaboration with Victoria’s Secret in 2003 and certified by the Guinness World Records as the most expensive bra ever made.

The Mouawad statement pieces and collections are available at the Mouawad flagship store in the Dubai Mall and in other Mouawad stores in the region.

Expansion plans cause Tanzania diamond revenue drop

Diamonds mining expansion has forced the Shinyanga-based Williamson Diamonds Mine, controlled by Petra Diamonds of South Africa, to post a revenue drop in the in second half of last year, ending December 2010.
The revenue dropped to USD2.0 million in June-December 2010 half year period compared to $7.5 million of January-June the same year.
The company attributed the revenue declined to its expansion plan that aims at increasing output to 10 metric tones per year of diamonds ore.
The company has reported the quantity of the diamonds sold also went down to 7,722 carats down from 43,018 carats in the same period under review, although the average price of the precious gemstones increases to $ 264 from $174 per carats. The Chief Executive Officer, Johan Dippenaar, says in a financial statement released last week that the expansion plan to establish a 10MTPA operation at the Williamson diamonds mine has commenced.
"…Production from the main pit has stopped whilst the re-shaping operations are underway," the CEO says in his report.
Due to expansion activities, sales and production during the period were therefore limited to contract alluvial mining, producing 10,847 diamonds carats for the period.
Mr Dippenaar says "there is currently no ore processing facility at Williamson diamonds mine whilst the refurbishment work on the old main plant is undertaken."
Capex-capital expenditure-at Williamson mine during the period was primarily focused on the 10MTPA project with the main activities undertaken during the period being engineering design, site preparation and earth works, and pit shaping.
Capex estimates the remainder of the expansion programme is worth $50 million, much of which will be covered under the $40 million IFC debt financing, with the balance being sourced from Petra's own treasury.
Petra Diamonds gross revenue of $90million was recorded in the second half, an increase of 44% on the $62.4 million recorded for first half of last year.
Mr Dippenaar, mainly attributable Petra's gross revenue to the healthy diamonds price environment, combined with increased sales volumes from its South African mines.
Petra's strategy is to deliver on its capital rollout, with a core objective to increase annual production to around 4.0 million carats by 2014 and further increase output to over 5 million carats by 2019.
"We believe this exceptional growth profile will place the Group in a unique position to capitalise on what we anticipate to be an exciting future for our market," Mr Dippenaar.

Thursday, February 24, 2011

Rio's Zimbabwe unit 2010 diamond output up 43 pct

Diamond output from global miner Rio Tinto's Zimbabwe subsidiary rose by 43 percent in 2010, and the firm continues to review plans to expand the mine, the local minority shareholder in the venture said on Thursday.

Diamond production at Murowa mine in southern Zimbabwe rose to 178,126 carats from 124,422 carats in 2009, said shareholder RioZim Limited, which holds a 22 percent stake in the main and was itself owned by Rio Tinto until 2004.

"However, only 141,000 carats were sold at higher average prices than the 162,000 carats sold in 2009," RioZim said.

Murowa is planning a $300 million expansion to lift output to 1.8 million carats but has delayed the project due to a law that seeks to force foreign-owned firms, including mines, to cede 51 percent shares to locals. Rio Tinto controls 78 percent,

Murowa resumed diamond exports in August last year after a six-month government ban, which analysts say was meant to pressure world gem regulator Kimberly Process to allow Harare to sell its diamonds from Marange, in the east of the country.

There are two kimberlite diamond mines in Zimbabwe -- Murowa and privately owned River Ranch -- and at least four alluvial diamond firms in Marange, where human rights groups have accused the army of rights abuses when evicting illegal miners in 2008.

A government minister told Reuters last week that the government would proceed with plans to take majority stakes in foreign-owned diamond mines operating in the country but would spare those operating in Marange, including a Chinese-owned mine.

Record yellow diamond on show in Natural History Museum

A bright yellow diamond weighing more than 110 carats has gone on display in London's Natural History Museum.

The Sun Drop, roughly the size of a woman's thumb, is one of the biggest of its type in the world.

It is on loan to the museum from diamond manufacturers Cora International.

Most diamonds are small and colourless - those in jewellery are typically less than five carats.

Colour in diamonds is caused by the presence of other substances or structural defects.
Continue reading the main story
“Start Quote

The real value with these gems is that they're exceptional, they're one-offs”

End Quote Alan Hart Natural History Museum

Tiny amounts of boron create a blue stone, while exposure to radiation at some point during formation will result in a green tint.

Pink diamonds are created by structural defects, while yellow diamonds are the result of traces of nitrogen in the carbon.

But strong colours are unusual, and larger stones with high levels of colour are especially rare.

Alan Hart, the Natural History Museum's minerals curator, told BBC News: "I've never seen a stone such as this."

"A one carat diamond is what most people are familiar with, and are really pleased to own. You can see how exceptional this diamond is."

Cora International chief executive Suzette Gomes told BBC News the cut was vital in bringing out a diamond's beauty.

"If the colour is weaker you would cut a square… to keep the colour and make it stronger. If your colour's very strong, you would cut a pear shape."
One-carat diamond next to the 100-carat yellow diamond Most people think of diamonds as no bigger than one carat and colourless

From finding a diamond in the rough to presenting a finished, polished, precious stone can take up to six months.

The stone is carefully analysed, as imperfections and inclusions can cause it to shatter when cutting begins.

Ms Gomes says the process is "like art… it takes a lot of courage and experience".

Neither Mr Hart nor Ms Gomes would be drawn on the possible price of the diamond.

Ms Gomes said pricing stones was "not something we normally talk about," adding that "the value at the moment is undetermined".

Mr Hart added that, to the Museum, "the real value with these gems is that they're exceptional, they're one-offs".


Wednesday, February 23, 2011

Gold remains steady as geopolitical tension persists, silver rising higher

Investors are closely watching the price of gold on Wednesday after it rose in recent days to within 3 percent of a record.

The unrest in the Middle East, particularly in Libya, the fourth-largest oil producer in Africa, has unsettled markets and pushed up oil prices.

Gold bullion for immediate delivery is trading at around $1,398 per ounce. Gold rose for a tenth straight year in 2010, hitting an all-time high of $1,431.25 on December 7 as investors sought protection against fears of rising inflation.

Analysts believe the price of gold is unlikely to fall as long as tension persists in the Middle East.

Jewellery manufacturers have been redesigning their products in the past year due to the sharp rise in gold prices. There has been a noticeable move to silver, but the white metal has also risen sharply and has reached a 31-year peak.

GIA invests millions in diamond education

The Gemological Institute of America in operation in Botswana from September 2009, employing more than 30 locals, has invested 5 million USD furthering diamond grading skills.

Administration Clients Relations Officer for GIA Botswana and South Africa, Elizabeth Bokaba told The Gazette that some of the skills and educational classes (courses) that locals would get from studying at their institution include among others, developing their skills to grade diamonds consistently and accurately using a modern gem microscope and jeweler’s loupe.

“Master GIA’s Diamond Grading System, discover time-saving shortcuts to determine a variety of grading factors, and learn how to read a GIA Laboratory Diamond Grading Report that is internationally recognized. All these skills are acquired through the GIA Diamond Grading course- which has been accredited by Botswana Training Authority,” revealed Bokaba.

She said GIA selected Botswana to set up a diamond educational institute because it is one of the leaders in the production of rough diamonds, and it is one of the fastest growing diamond centers in the world and would facilitate the transfer of knowledge to locals.

“And also after having assessed the needs of the market –to be able to trade locally. We are also the first occupants at the Diamond Technology Park. We have for the past few years worked with the Harry Oppenheimer Diamond Training school in South Africa to deliver diamond grading skills through our D.G.L lab class course. We have also been in partnership with DTCB whereby they would send (every year) 10 representatives from their company for GIA’s Diamond Grading Course. And the Botswana government is very transparent, (easy to work with),” she said.

Bokaba said GIA’s Diamond Grading Course is offered 4 times in a year adding that GIA has organized the Alumni Association’s Africa Chapter to enhance ongoing education, communication and networking opportunities for GIA graduates in Botswana and South Africa.

“Thomas M. Moses, Senior Vice President of GIA Laboratory and Research, will address the GIA Alumni Association’s Africa Chapter on February 21 in Botswana. The lecture, titled “Updates on Synthetic Diamonds and Treatments,” will take place in Gaborone,” she said.

U.S. jewellery market bouncing back, but challenges remain

The American retail jewellery market from the lower end of the market to stores with big-ticket items bounced back in 2010. Will the recovery continue this year?

Has the U.S. retail jewellery market bounced back? U.S. retail sales in general are showing healthy rises, and are forecast to increase again this year. And jewellery retailers are not being left behind, with retailers across the spectrum – from Zale Corp and Signet, leading online retailers such as Blue Nile, and high-ticket Tiffany & Co – all report rising sales.

Indeed, rising consumer demand for jewellery sales is widely regarded as providing a confirmation that recovery is underway since, just as jewellery is among the first sales categories to decline when a recession begins, they are the last to rise when resurgence is gaining pace. Rising jewellery sales not only show renewed confidence in the state of the economy, but are also seen as an indicator that consumers have more self-belief in their personal finances.

“There has been a big turnaround in the American jewellery market in the past two years,” said a senior manager at an Antwerp diamond polishing firm. “If you look back to the start of 2009, there was a feeling that a disaster was happening. However, Americans are made to shop. It took them a little while to return to the stores, but they are coming back,” he added.

However, American shoppers have returned to a different shopping environment, with Signet Jewelers Ltd., which owns the Kay Jewelers and Jared chains in the U.S., saying in a presentation to investors in2010 that there had been a 12 percent decline in the number of jewellery stores in the United States since the beginning of 2008.

The type of jewellery being bought has also changed, said the Belgian diamantaire. “We are still seeing downsizing in the diamonds that are being bought, but we believe that is probably also due to the rising price of gold which has led manufacturers to scale back diamond sizes and qualities in order to keep price points realistic,” he added. That has typically meant smaller, lighter items requiring smaller amounts of solid gold, and featuring elements such as twists, lace designs and cutouts. It also means combining gold with silver or other elements.

Belgium’s polished diamond exports to the United States grew during 2010, rising 30.4 percent to $3.1 billion with a slight fall in volume terms of 2.6 percent to 988,376 carats, indicating that American buyers were willing to pay more for fewer goods. That trend appears to be continuing this year, with exports in January rising 24.9 percent to $241.7 million while declining 7.7 percent to 61,229 carats.

Another difference in the outlook of the post-financial crisis American shopper is a focus on value for money and securing a good deal, almost without regard to the level of store at which they are shopping, whether a department store or a luxury retailer.

A report from the Jewelers Board of Trade, based on U.S. Commerce Department statistics, shows U.S. jewellery sales rose 7.7 percent to a record $63.4 billion last year. That came after two straight years of declines, with falls of 2.7 percent in 2009 and 2.4 percent in 2008. And 2011 looks to be getting off to a good start with American consumers forecast to spend around $3.5 billion on jewellery for Valentine's Day, according to the National Retail Federation. That would be a 17 percent jump on the $3 billion spent last year.

The rise in sales is borne out by the financial results of a range of retailers in the U.S. market. Zale Corp. said that sales at stores open at least a year, a critical indicator for the retail trade, increased by 8.5 percent in the combined November-December holiday sales season compared with the same period of 2009 when same-store sales slumped 12 percent.

Reorganisation and tough cost-cutting appear to be the key for Zale Corp, which saw the spending power of its clientele battered by the impact of the recession. Zale was hit hard by the recession due to a toughening up of credit and rising unemployment, leading it to close hundreds of stores and change its senior management. The retailer has shown an improved performance each quarter since it implemented its turnaround plan last February. The third-largest jewellery retailer in the United States, Zale reported revenue for the November-December period climbed 8 percent to $533.1 million from $493.7 million in the same period of 2009.

Meanwhile, the Signet Group, another major U.S. jewellery retailer, posted an 8.1 percent increase on the year in sales for the last nine weeks of 2010. Indeed, its results illustrated the rising strength of the American market because the increase in sales overall was due to growth at its U.S. stores since those at its U.K. stores – H. Samuel and Ernest Jones – declined by 4.2 percent over the same period. Outgoing Signet CEO Terry Burman said the U.S. division saw same-store sales jump by 11.7 percent on the year.

Internet retailers are also seeing rising sales, with Blue Nile reporting a 14-percent rise in fourth-quarter profit with its best-ever Christmas season sales figures. Blue Nile CEO Diane Irvine said the online retailer was in a good position to take advantage of “significant growth opportunities” in the United States and overseas this year. Blue Nile also forecast that net profit and earnings would be in the double-digit area for the full year, in line with analysts’ expectations.

At the higher-end of the consumer jewellery market, luxury jewellery retailer Tiffany & Co. reported better-than-expected sales during the Christmas holiday sales season, with healthy sales of its high-end fine jewellery, diamond engagement rings and fashion gold jewellery in the November-December period.

In an indication of the growing strength of the economic recovery, Tiffany & Co. said revenue was down for lower-end silver, which was strong during the recession as shoppers looked to reduce spending. Tiffany believes revenue for the fiscal year ending January 31 will come in at around $3.1 billion, just above analysts’ expectations of $3.05 billion. Although sales in the Americas region were the lowest in Tiffany’s worldwide markets, it still came in an encouraging 9 percent higher $484.8 million. As with Zale and Signet, revenue at Tiffany & Co stores open at least a year rose 8 percent when adjusted for exchange rates changes.

Although the U.S. retail jewellery market was hit hard following the onset of the financial crisis in the fourth quarter of 2008, some Antwerp firms noticed the decline considerably ahead of that. Raj Mehta, vice president of Rosy Blue NV, said the American market was already moving slowly in 2007.

“There has been a pick-up in the U.S. market, but it is nothing compared to the growth rate in the Far East and price points have gone down,” Mehta told Antwerp Facets. “The United States has a lot of internal issues to deal with. The situation is improving, but the country still has a way to go to get back to its peak.

“The world is adapting to new price levels, but the United States is not. It is struggling to keep up with the new prices. You can see the reduced budgets that are leading people to request smaller and lower-quality diamonds. That is the face of the retail market in the United States now,” he added.

Are U.S. jewellery sales likely to rise this year? Based on predictions of general retail sales, the answer would appear to be positive. U.S. retail sales are forecast to climb by 4 percent in 2011, which would be the largest rise since 2006, according to a report by the widely watched National Retail Federation (NRF). And that despite consumers still being somewhat cautious, the trade group said. That would lead to total sales of $2.47 trillion for 2011. The figures do not include autos, gasoline and restaurant data.

The NRF’s forecast was the result of looking at a range of economic indicators that give an indication regarding consumer consumption, as well as recent retail performance. The upbeat figures follow seven straight months of sales growth, according to government figures, and particularly holiday sales which rose 5.7 percent, the NRF said. However, although the forecast sales figures for 2011 would be better than the 3 percent average annual growth rate during the past decade and higher than the 3.7 percent growth posted in 2010, it would still be lower than the 5 percent rate that the NRF says reflects a strongly growing economy.

"With retailers leading the charge, the economic recovery appears to be gaining some steam," NRF Chief Executive Matthew Shay said in a statement. Meanwhile, NRF vice president Scott Krugman said, "Consumers have a lot of spending power that they have been sitting on, as evidenced in part by the strong holiday sales.” Consumers are also likely to have extra cash due to Social Security tax cuts that started last month. Meanwhile, at the higher end of the market, the rising stock market is creating the wealth and the confidence to buy more.

However, a rise in retail sales this year cannot be taken for granted since a range of factors could affect them. These include high food inflation and continuously rising gasoline prices. In addition, rising prices of commodities, including cotton and other fabrics, and rising manufacturing and labour costs will boost prices of food and clothing. Analysts at Citigroup forecast a rise of 4-6 percent in clothing costs in the first half of this year, and an even more alarming rise of 13-15 percent in the second half.


Tuesday, February 22, 2011

Alrosa: Diamond Production Will Reach 39.6 Million Carats in 2018

Alrosa's annual diamond production will reach 39.6 million carats in 2018, the Russian diamond company announced Monday.

In 2009, a year still beset by the global financial crisis that hit the diamond industry in late 2008, Alrosa produced 32.8 million carats of rough diamonds, many of which were sold to the Russian Treasury to keep them from flooding the market.

According to Alrosa's strategic development plan, an investment of $7.38 billion over seven years will see the completion of development and the beginning of production at the Mir, Aikhal, and Udachny diamond deposits.

As far as sales, Alrosa predicts annual sales revenue of $35.1 billion from 2011-2018, with profit of $3.21 billion.


Monday, February 21, 2011

Arian Silver, Stellar Diamonds, Kalahari Minerals, AMG

Mexico-focused silver exploration and production company Arian Silver Corporation AGQ has reported that company is 'highly encouraged by the latest results from our current phase of drilling San Jose operation'.

Chief Executive Officer Jim Williams added "A revised resource calculation will be undertaken on conclusion of the current drill programme. Fine-tuning of both the mining and milling operations is ongoing... Proceeds from the 68 tonnes of concentrate sold to date amount to approximately US$580,000, subject to a final pricing review and possible adjustment."

AMG Advanced Metallurgical Group N.V has acquired 100% of the LLC interests of KB Alloys, LLC KBA, a market leader in Europe and South America for aluminium master alloys, grain refiners and aluminium powder technologies, from CHS Capital LLC for $23.5 million in cash.

KBA is the market leader in North America for the same products with production sites in Kentucky and Washington, USA. Both companies have complimentary operations in China located in Jiangsu and Jiaxing provinces.

Kalahari Minerals has announced that discussions are currently taking place regarding Potential Combination of Extract Resources Husab Uranium Project and Rio Tinto's Rössing Uranium Mine.

The AIM listed resource company noted the announcement published today on the ASX by Extract Resources, in which Kalahari's subsidiary, Kalahari Uranium Limited, holds a 41.08% interest. The Board of Kalahari confirms that is holding discussions with Extract to explore various different options that might simplify the Extract/Kalahari shareholding structure. Further new expected.

Stellar Diamonds STEL focused on West Africa, is to accelerate the development of its hard rock kimberlite projects and provides an update on its alluvial diamond operations after companies Bombokos sale realises record average price of $201/ct.

Company added that Mandala diamond production of 10,264 carats in Q4 2010 at an average grade of 16cpht. Stellar also sold 10,048 carats in February to generate $361,500.

Petra confident of diamond market's sparkle

Petra Diamonds (PDL) is confident the strengthening diamond market will continue to sparkle, as it eyes up a move to the Main Market.

In the wake of the company's interim results, chief executive Johan Dippenaar told Interactive Investor that he was "very optimistic" that the market will remain firm, amid growing demand and reduced supply.

He noted that following the downturn of 2008, the retail off-take has been driving diamond prices higher, with retailers once again growing "adventurous" after what was a cautious period for the industry.

He cited growing demand from the likes of China and India, among other emerging markets, as a key driver behind the rising interest in the industry. China recorded exceptional double-digit growth of 25% in 2010, while India racked up a 31% jump.

Meanwhile, supply is set to become more constrained as producers do all they can to maintain current levels of supply, he added.

"Going forward, industry growth is expected to be line with global economic growth, though we consider that there is potential for the diamond market to outperform if the growth in China and India maintains its rapid pace."

The company's bullish outlook came despite a downturn in both production and profit figures for the first half of the 2011 financial year.

The African-focused diamond miner posted group EBITDA of $20.2 million for the six months to 31 December, compared to $38.1 million a year earlier as the company had previously booked a $31 million credit fair value adjustment for Cullinan.

The lower EBITDA led to a reduction in post-tax profits to $24.5 million for the half year.

However, Dippenaar shrugged off the dip in figures, stating that the market had been expecting slightly softer numbers and maintaining that the story looks strong going forward.

The addition of its recently acquired Finsch mine in South Africa is set to significantly ramp up the company's production and revenue going forward, he said. The company hailed the deal a "landmark development," given that it will increase the company's gross resource base to over 300 million carats and adds an eighth producing diamond mine to the group's portfolio.

While Petra had previously targeted group production of three million carats by financial year 2019, it is now set to achieve this target by FY 2012.

"We are on track to achieve our target of four million carats by FY2014-16, thereafter ramping up to five million carats by 2019," Dippenaar told Interactive Investor.

The addition of Finsch has also brought the group one step closer to achieving its goal to join the bright lights of the London Stock Exchange Main Market.

While Dippenaar declined to give dates, he did reiterate that it remained a primary objective of the company.

Fairfax mining analyst John Meyer said: "Petra remains our favoured mid/large tier diamond miner and with the Finsch mine set to boost group output substantially the company is rapidly evolving. We look forward to future results that should strengthen in response to higher diamond prices as well as improved operational performance optimising potential revenues from the expanding asset base."

Sunday, February 20, 2011

India’s Rough Diamonds Cost 27% More Than They Did Last Year

India’s gross rough diamond imports in January increased 16.3 percent to $1.02 billion, according to provisional figures released by the GJEPC. The volume of imports, 12.4 million carats, declining 8.6 percent compared to January 2010.

The average value of India’s gross imports, $81.87 p/c, increased 27.2 percent from the $64.35 p/c averaged just the year before.

Even though the figures include gem and industrial grade goods, the sharp rise further demonstrates the continued price increases of Gem quality goods.

Rough diamond exports in January totaled $90.1 million on exports of 2.32 million carats.


Thursday, February 17, 2011

Gold Tops 5-Week High, Silver At 31-Year High

Comex gold futures ended Thursday at a fresh five-week high on technical trading and muted U.S. economic data, while increased hedging by silver producers pushed silver prices to fresh 31-year highs.

The most actively traded contract, for April delivery, settled up 0.7%, or $10, at $1,385.10 a troy ounce on the Comex division of the New York Mercantile Exchange.

The thinly traded February-delivery contract settled up 0.7%, or $10, at $1,384.70 a troy ounce.

As gold futures drifted higher throughout the day, the contract rose above key technical levels that triggered buy orders.

"When a certain price is triggered you see a lot of buyers come in," said Larry Young, president of Covenant Trading LLC. Gold saw a technical break out above $1,382.50, he added.

The precious metal also benefited from modest safe-haven buying on weaker-than-expected U.S. economic data.

The number of U.S. workers filing new claims for unemployment benefits increased by 25,000 to 410,000 in the week ended Feb. 12, more than the 17,000 increase forecast by economists.

Gold futures ticked higher on the report, though market reaction was muted.

"The numbers aren't that far off the mark to cause any excess movement in the markets," said Frank Lesh, broker and futures analyst with FuturePath Trading.

The labor market's slow recovery has been a boon for gold prices, as the Federal Reserve's dual mandate keeps the bank from raising interest rates and removing other aspects of the monetary stimulus program. With interest rates remaining low, gold maintains its competitiveness with interest-bearing assets such as bonds.

Gold also drew support from slightly higher U.S. inflation data for January. Consumer prices inched up 0.4% in the month, compared with an expected 0.3% increase. But underlying inflation, which excludes volatile food and energy prices and is considered a better measure of price trends by the Federal Reserve, rose by 0.2%.

The data were positive for gold, which is considered a hedge against inflation and a store of value. Market participants, however, pointed out that the pace of inflation in the U.S. continues to lag other countries amid a slow economic recovery.

"There might be a fear of higher rates out there in the market, but the Fed told us that a little bit of inflation is good--it shows economic activity," Lesh said.

Market participants also noted some modest safe-harbor gold purchases linked to the simmering political tensions in the Middle East. Gold traders kept a wary eye on conflicting reports about Iran's plans to send two warships through the Suez Canal, which first surfaced Wednesday. While no Iranian vessels are scheduled to pass the shipping thoroughfare, Israel characterized the plans as a "provocation."

Meanwhile, media reports about pro-democracy protesters' clashes with armed forces in Bahrain, Libya, Yemen and Iran added a small safe-haven "premium" to gold prices, Covenant Trading's Young said.

Silver pushed to fresh 31-year highs as an uptick in producer hedging tightened physical supplies of the metal and boosted prices.

Silver for March delivery, the most actively traded contract, settled up 3.1%, or 94.1 cents, at $31.570 a troy ounce on the Comex division of the New York Mercantile Exchange.

Silver miners have been expanding their hedging programs since the start of the year. Such programs see producers lock in today's prices for future production to protect against potential price declines by entering forward-sales contracts. Banks that execute these forward sales borrow silver from the spot, or immediate delivery, market, thereby temporarily crimping physical supply.

"Given silver is at prices we haven't seen since the 1980s, it is very attractive for some people to hedge that," said David Jollie, precious metals analyst at Mitsui Global Precious Metals.

Diamonds must create jobs, says Saleshando

Even though it is one of the world's largest producers of diamonds, Botswana benefits less from them than non-diamond producing countries.

Member of Parliament for Gaborone Central, Dumelang Saleshando told Parliament yesterday that out of a US $90 billion (about P600 billion) diamond revenues, Botswana only gets US$3 billion (about P19 billion), which is only 0.03 percent of total revenues, and that only less than 30 percent of diamond cutting is done in Botswana.

Presenting the Botswana Congress Party's response to the recently presented budget, Saleshando accused the Botswana Democratic Party (BDP) government of failing to take advantage of Botswana diamonds to create employment opportunities.

"It will be difficult to find a more impressive failure than BDP when it comes to creating jobs for Batswana from diamonds," Saleshando said. The youthful MP said that it was disappointing that even though Botswana has profitable mines; the government seems too shy to utilize opportunities in emerging markets in countries like Angola.

Saleshando described Minister of Finance and Development Planning Kenneth Matambo's budget as lacking innovation. He said last year's budget theme of "Transforming our Economy," has not been evident in the current budget of measures to transform the economy. Saleshando said the budget seems to operate on the idea that economic recovery is driven by recovery of diamond sales, and asked what would happen if there was another slump in the diamond industry. He said that increase in diamond sales does not bring in jobs.

"There is no Plan B, it is business as usual for the BDP," he said. He further accused the BDP of using revenue from diamond sales to create problems, citing the Ipelegeng and Constituency Tournament as examples.

He further said continuing with these two schemes is a contradiction to Matambo's budget objective of being cost-effective. Although the MP congratulated the government for moving from poverty alleviation to poverty eradication, he accused the government of using poor people as insurance at election time. He said that they have been cases where people have been removed from the destitute list, and then re-instated during campaign season. He also expressed disappointment at the policies proposed as the poverty eradication vehicles.

"It's not possible that backyard gardening will catapult anybody out of poverty," he said, adding that graduation rate out of destitute level is low. The MP said that as the BCP they propose a two-fold solution to poverty eradication, the first being job creation, and the other being provision of compulsory high quality free basic education for all Batswana. The MP said that as long as some Batswana have no access to high quality basic education, they will not be able to escape poverty, giving districts such as Kweneng West and Gantsi where he said poverty is prevalent because failure rates from primary level are exceptionally high.

Further, the MP said that despite promises to protect the small business sector since former president Festus Mogae's term, small business owners are still unprotected, and victims of byelaw officers. Saleshando said that there is therefore need to create an office of Small Business Ombudsman. He said although there are a number of measures in place to protect big businesses, there are none to protect the small businesses.

Regarding the budget, Saleshando noted that the rich have much to celebrate, while the poor have nothing to celebrate. The rich celebrate the opportunity to buy Botswana Telecommunications Corporation shares, and the opportunity provided by intention to outsource cleaning and landscaping services, he said.

Wednesday, February 16, 2011

Economics and demography giving boost to Indian jewellery market

India's surging economic growth is drawing more people from the countryside to become city-dwellers and that is creating a burgeoning middle class.

Although the diamond and jewellery industries’ eyes are usually turned toward China where any discussion of the emerging markets in the east is concerned, India appears to currently have the more developed jewellery market. Although the Chinese diamond jewellery market is soaring, it is still at a relatively early stage whereas the Indian market is more mature.

And financial results announced this week by two major players in the Indian retail jewellery sector give added weight to the rising demand for jewellery in the sub-continent. The Gitanjali Group reported that revenues jumped 46 percent to $584 million in the third fiscal quarter ending December 31, while net profits soared 64 percent to $22 million. Diamond sales surged 58 percent to $275 million, while jewellery sales were up 37 percent to $330 million. Domestic sales powered ahead by 78 percent to $284 million, while international sales jumped 25 percent to $300 million.

Meanwhile, during the first nine months of the fiscal year, Gitanjali’s group revenues rose 43 percent to $1.55 billion, and net profits soared 87 percent to $57 million. Meanwhile, diamond sales surged 50 percent to $798 million, and jewellery sales rose 36 percent to $806 million. Domestic sales were up 53 percent to $666 million and overseas sales increased by 36 percent to $880 million.

And the potential of the Indian jewellery market is being recognized abroad, with a recent report that LVMH Moët Hennessy Louis Vuitton, the largest luxury products company in the world, is to buy a large minority share in India’s Gitanjali Gems' planned unit that will run its branded jewellery and retail businesses. The value of the deal is believed to be $100-125 million, according to reports.

Meanwhile, Goldiam International, which manufactures jewellery in India, reported that third fiscal quarter sales rose 47 percent to around $157 million. Revenue during the first nine months of the fiscal year increased by 30 percent to $389.2 million, while net profit soared 157 percent to $35.4 million.

Among the advantages enjoyed by Indian jewellery manufacturers and retailers is the large middle class population with the disposable income available to buy jewellery. India's middle class consumption is forecast to triple as a share of India's total consumption over the next 15 years, according to Deutsche Bank. Evidence shows that as income increases, the amount of discretionary spending and the variety of discretionary spending rises. In addition, the use of financial services by the middle class has increased significantly, with credit card growth ballooning in recent years, while the provision by banks of unsecured personal loans has also risen sharply.

The Indian domestic jewellery market is currently worth about $16 billion, according to a report by Credit Analysis and Research Limited (CARE). However, the value of the branded jewellery market in India is estimated at less than 10 percent of the total domestic jewellery market, CARE said. That could be because the domestic jewellery is 96 percent “unorganized”, meaning the approximately 300,000 traditional retailers or family-owned businesses with a presence in just one town, while just 4 percent is in the “organized” sector. The CARE report forecasts sales of non-branded jewellery products will grow at around 12 percent annually, with growing numbers of Indians being persuaded to buy due to hallmarking of precious metals and the rising number of certificates being provided with diamonds.

The branded jewellery sector is expanding rapidly as it shows Indian consumers the advantages of buying from the expanding number of jewellery chain stores. Indeed, there are estimated to be about 50 brands now compared with around 30 players in the middle of the last decade. And as the results from Gitanjali and Goldiam International and other firms have shown, revenues and net profit are rising by tens of percentage points.

In addition to Indian brands such as Tanishq, Nakshatra, Gili, Cygnus, Sangini, Asmi, and D'damas, India has also been penetrated by well-know foreign brands, such as Tiffany, Bulgari, Chopard, Cartier, and Harry Winston. Italian brands, such as Damiani and Di Modolo, sell via exclusive boutiques in five-star hotels, while international companies such as Thailand’s Pranda Jewelry, and Christian Dior, are also reported to be looking into establishing a presence in the Indian jewellery retail sector.

Gitanjali plans to increase the number of retail outlets in India for the sale of its D’Damas brand, with 15 stores being opened by mid-2010, and to add 80 more franchise outlets by the end of 2011. D’Damas has 28 franchise stores and a network of 750 retailers across 325 towns in India. The jeweller aims to reach consumers in 100 more towns via its expansion plan, said R K Menon, chief operating officer, D’Damas Jewellery (India) Pvt Ltd. The main challenge, initially, is to create awareness and, thus, demand for branded diamond jewellery, Menon added.

The overall Indian luxury market is valued at around $3.5 billion annually and forecast to expand to $30 billion by 2015, said business consultants McKinsey in a report in late 2010. Indeed, India could overtake Germany as the world's fifth-largest consumer market by 2025, McKinsey added.

McKinsey data also estimates that while the total population will increase by almost 30 percent between 2005 and 2025, the middle class population will increase by a factor of approximately 10, or almost 1000 percent, during the same period. Over a two-decade period from 2007, India’s middle class segment is seen rising from about 5 percent of the population to more than 40 percent.

McKinsey also estimates that by 2005, 21 million of India’s 210 million households earned more than $4,000 a year, qualifying them for membership in what it calls “the consuming class.” However, by 2015, the number of consuming class households will likely triple to 64 million. Meanwhile, at the top end of the market, there is a continuously expanding number of super-wealthy Indians who are likely to create strong demand for big-ticket items. The number of high net worth individuals grew by as much as 51 percent to 126,700 in 2009 from 84,000 in 2008, according to the 2010 Merrill Lynch-Capgemini World Wealth Report. High net worth individuals are defined as those having investable assets of $1 million or more, excluding primary residence, collectibles, consumables and consumer durables.

Two further elements that are seen providing a boost to growth in India are ongoing urbanization, and the comparative youth of India’s population. Currently, only around 30 percent of India’s population, or around 300 million people, live in cities, but over the next 20 years, that number is forecast to grow by a further 300 million. The new city-dwellers, inevitably, will adopt the more sophisticated styles and fashions of their neighbours, including jewellery purchases. That is likely to be all the more the case, says McKinsey research, since a large proportion of the new city inhabitants will be in their twenties and with the levels of disposable income necessary to splash out money on jewellery and fashion items.

It took around four decades from 1970 for the number of India’s city dwellers to rise by close to 230 million, but analysts estimate that it will take only half that time for another 250 million to join them. The forecast growth will also be uniform across the country affecting almost every state.

Related to that is what is described as the continued rise of “organized retail,” with large, branded store chains providing products that are systematically stocked and displayed, helping to accelerate the transformation of consumer preferences. Whereas organized retail accounts for less than a fifth India’s retail sector with most being in small, family-run shops, in recent years scores of shopping malls have opened on the edges of India’s largest cities and the trend is seen continuing.

The Indian jewellery industry is also changing its approach to the type of jewellery it is manufacturing, taking into account the need to make items that will appeal to young, upwardly mobile people who may not yet be earning salaries that enable them to buy big-ticket items. As a result, the domestic market is seeing more lightweight and highly fashionable designs that fall in a price range that is affordable.

"We have shifted our target from upper to middle-income people,” said Jayantilal Challani, president, Madras Jewellers & Diamond Merchants Association in comments to the media. “We also have started following a segment-oriented approach, wherein, instead of targeting buyers in general, we are targeting different groups, like working women, and children with specific designs."

Meanwhile, the Indian jewellery export sector is growing at around 7 percent annually, and is forecast to reach exports of $23.5 billion by 2012. As a result of the global financial crisis, many jewellery exporters have moved away from the traditional markets such as the United States and Europe to Hong Kong, Australia and Russia. And that has paid off with growth in exports in the first half of the current fiscal of around 10-15 percent. Exporters are also investigating opportunities in Sri Lanka, Bangladesh and Thailand, according to Yogesh J. Shah, chairman of the Gem and Jewellery India International Exhibition. "Earlier we never looked beyond the U.S. and European markets for exports, but now we are moving on to newer markets," he said.

Blue Nile reports 14 percent rise in Q4 profit, but Q1 projections disappoint

Online diamond retailer Blue Nile Inc. posted a 14 percent rise in fourth-quarter profit with its best-ever holiday sales season, but its shares fell sharply after the firm issued a weak outlook for the first quarter.

Blue Nile reported a net profit of $6.2 million, or 41 cents a share, up from $5.4 million, or 35 cents a share, from the same period of 2009, while net sales increased by 12 percent to $114.8 million.

In November, Blue Nile forecast higher net profit of 41 to 46 cents on revenues of $106 million to $115 million.

Meanwhile, Blue Nile reported that international sales shot up 31 percent to a record $15.3 million in the fourth quarter, while gross margins widened slightly to 22 percent from 21.7 percent.

The company upset investors after it forecast first-quarter profit of 14 to 16 cents per share on revenues of $76 million-$78.5 million. A survey of analysts polled by Thomson Reuters looked for a profit of 20 cents on revenues of $80 million.

Blue Nile CEO Diane Irvine said the online retailer was in a good position to take advantage of “significant growth opportunities” in the United States and overseas.

Blue Nile also forecast that net profit and earnings would be in the double-digit area for the full year, in line with analysts’ expectations.

Courier man looted of 6.6L diamonds, cash

Diamonds and cash worth Rs 6.68 lakh were looted from a courier deliveryman in Rampura area on Wednesday morning. The victim Pravin Patel was hit on the head with an iron rod, leaving him unconscious and needed surgery later in the day.

Patel has been an employee of Jayanti Soma Patel for the last eight years and regularly visited Katargam area to deliver diamonds on his bicycle. He was following his routine when he was attacked by two men on a bike near Himson Mill at around 8.30 am. The men escaped with Patel's bag containing packets of diamonds and Rs 27,900 cash.

When his colleagues and police reached the spot where he was attacked, Patel was lying unconscious and was shifted to a hospital. Doctors said he had suffered a hemorrhage due to the hit. His condition was critical even after the surgery.

"We have instructed courier firms to ask their men to go through specific routes where police officials are constantly on alert and the roads are crowded. Patel was attacked on an isolated stretch. In fact, our officers had even told him earlier to take the more crowded stretches, but he chose a shortcut on Wednesday," said police inspector MJ Pathan.

Police officials increased surveillance in different parts of the city after the attack, but got no clues till late evening on Wednesday.

Canadian diamond fetches record price

A huge rough diamond, billed as the most significant find in the 13-year history of Canada's Ekati mine, was auctioned off in Belgium this week for a reported $2.8 million.

The 78-carat diamond from BHP Billiton's Ekati mine in the Northwest Territories was sold in Antwerp on Monday, Valentine's Day.

The company would not disclose the buyer of the diamond, called the "Ekati Spirit."

BHP Billiton invited a select group of about 70 buyers to the sale of the diamond, which was found in October 2010.

"The diamond is a breathtaking example of the stunning gem-quality diamonds produced at Ekati and potentially the most valuable stone in the mine's 13-year history," BHP said in a news release.

The diamond, which measures 21 by 18 by 13 millimetres, is not the largest to come from the mine, however. Two years ago, a 182-carat diamond was found, but it lacked the clarity, carats and colour of the one sold Monday.

A pear-shaped, 10.22-carat gem from Ekati had held the Canadian record of $1.2 million at auction.

Read more:

Tuesday, February 15, 2011

Diamonds rake in US$174 million in two months

The Treasury is benefiting from sales of diamonds that have surpassed US$170 million this year alone, despite Finance Minister Tendai Biti's claims that diamond dividends were not flowing into the national fiscus.

Documents obtained by the State-run Herald newspaper reveal that Treasury will benefit from at least US$174 million in diamond sales for January to February 7 alone.

Some of the money has already reached the Treasury, although Biti claims that the country has not benefitted from diamonds.

The funds are from sales by Mbada Diamonds and Marange Resources (formerly Canadile Miners).

A dividend amounting to US$85 685 491,01 has been realised while the Minerals Marketing Corporation of Zimbabwe has generated US$31 335 235,48 in royalties.

A sum of US$41 370 740,61 has been raised through the Zimbabwe Reve-nue Authority as corporate tax, and US$2 823 809,73 in management fees.

A further US$10 019 071,43 has co-me from withholding taxes, VAT on management fees stands at US$2 488 328,24 and VAT on MMCZ’s commission is US$411 474,15.

This amounts to US$174 223 814,88.

Zimbabwe Mining Development Corporation chairman Mr Godwills Masimirembwa indicated that US$76 million would be paid to Treasury in a fortnight.

Sources also indicated that Minister Biti was trying to force the Mines and Mining Development Corporation into revealing how Zimbabwe sells its diamonds, which could result in the contracted foreign firms being slapped with Western sanctions.

Recent revelations by whistle-blower website WikiLeaks claim Minister Biti has in the past been actively consulted by the EU when the bloc structured its sanctions regime.

The source conjectured that cutting off diamond money could result in some elements using workers’ dire straits as a platform to try and launch civil disobedience.

ZMDC chair Mr Masimirembwa yesterday said the illegal sanctions invited on Zimbabwe by MDC-T were impacting negatively on mining operations.

“We are working under very difficult circumstances because ZMDC, MMCZ and their subsidiaries are all under the US and EU sanctions which were invited by the MDC-T.

“Our view is that the Minister of Finance should agitate for the immediate lifting of the illegal sanctions imposed on Zimbabwe.

“The illegal sanctions are impacting negatively on the flow of income from proceeds of diamond sales to MMCZ and ZMDC.”
Minister Biti, he said, should stop politicking on the money Treasury had already received.

Monday, February 14, 2011

Diamond heist: 14 cases of bank locker theft solved

Almost a month after the crime branch arrested a four-member gang involved in looting diamonds and cash from high security bank lockers in the Zaveri Bazaar, 14 theft cases which were reported from Bank of India, over the past three years have also been solved. The joint commissioner of police, crim
e, Himanshu Roy, said that a total of over Rs8.9 crore of diamonds, deposits, cash and jewellery have been recovered from the mastermind of the gang, Goregaon (East)-based diamond trader Ajay Mehta, and his cronies so far.

Mehta had been arrested by the crime branch along with his associates Chandrasen Berde, 49, Shamshuddin Azmi, 47, and master locksmith from Bhayandar (E) Farid Hasmi, 47, on January 19.

The police had recovered diamonds worth over Rs4 crore from Mehta’s Valsad house, stolen from eight lockers of the Bank of India’s Opera House branch.

During questioning, Mehta disclosed that apart from the eight lockers from which the police had recovered cash and properties worth Rs4.4 crore, he also owned a locker at the same bank where he had kept another (stolen) consignment of diamond and cash.

During search, diamonds worth Rs2.6 crore and cash was found from the locker.

The police then learnt that Mehta has a savings account in which he had deposited Rs83 lakh. The cash too was seized. It was then learnt that he owned two more accounts in which Rs30 lakh and Rs21 lakh deposits had been made respectively. The money was subsequently seized.

Roy said, following the recoveries, the police learnt that thefts had been reported to the bank from time but were not reported to the police. “We will be returning the properties to their rightful owners after completing the necessary legal formalities,” Roy said, adding that some more recoveries were likely in the case.

The police have also recovered 27 duplicate keys, which had been made by Farid. Roy said that keys were being examined and tried to ascertain as to how many lockers were actually opened using these duplicate keys.

De Beers may raise output 21%

The De Beers Group ‒ the largest diamond miner in the world ‒ may raise its annual rate of output 21% to full capacity by the end of 2012, and is preparing a final study for a new mine in Canada to meet “extraordinary” demand from China and India.

Revealing this here, joint acting CEO Bruce Cleaver said the company might raise the pace of its production to an annual 38 million carats during this year and to 40 million in 2012, from 33 million in 2010.

De Beers ‒ 45% owned by Anglo American plc ‒ has reported record 2010 earnings before interest, tax, depreciation and amortization of US$1.4 billion, following a 57% surge in its trading arm’s sales to US$5.08 billion.

China and India delivered “extraordinary growth, well beyond our expectation at 25% and 31% respectively for the year,” Cleaver said on a conference call. “In America, the Christmas season also exceeded our expectations with an increase of approximately 7% for the full year. Growth will probably continue to perform in those markets,” he added.

De Beers and main rival ZAO Alrosa of Russia have benefited from restocking after the global credit crunch forced purchasers to cut inventories in 2009, and an average 27% recovery in prices.

“A blossoming diamond market and strong rebound in fundamentals is fueling gains in listed producers,” Liberum Capital Limited wrote in a note. “Namakwa Diamonds Limited is up 24% this year and Petra Diamonds Limited is up 29%.

“In anticipation of further demand growth, De Beers will in a few weeks submit the final feasibility study for the Gahcho Kue project in Canada, its third mine, which may yield 5 million carats a year,” said joint CEO Stuart Brown. It owns 51% of the venture with Mountain Province Diamonds Incorporated. De Beers also plans to spend US$3.6 billion expanding its Jwaneng mine in Botswana, and may build underground operations at Venetia in South Africa.

“De Beers isn’t distracted by speculation on whether Anglo American will increase or decrease its shareholding in the company,” Brown added.

Sunday, February 13, 2011

Now that's a Valentine's gift: £7m heart-shaped diamond to go on sale

If you are expecting the umpteenth box of chocolates and bunch of flowers on Valentine's Day, consider nudging your significant other in the direction of this spectacular gift for some inspiration.

A 56-carat heart-shaped diamond is up for sale for those looking for a gift that will satisfy even the most demanding of women.

But it is not for everyone, with the likely buyer expected to pay up to £7.5million.

However there is still a bit of time to save up, with Christie's selling the item in Geneva in May.

The diamond is cut to a perfectly symmetrical heart. It is one of only a handful of 50 carat-plus jewels to be offered in an auction over the last 20 years.

Part of Christie's Magnificent Jewels collection, the item has an estimated price tag of between £5.6 million and £7.5 million.

However it is still relatively modest in terms of the most expensive diamonds ever sold.

The Cullinan diamond is the most expensive ever valued at £250million.

It is the largest rough gem quality diamond ever found, at 3,106.75 carats (621.35 g).

And the largest polished stone from the diamond, Culinan I, was the largest finished stone in the world until the discovery of the Golden Jubilee diamond in 1985.

Both are in Britain's Crown Jewels after being found at the Premier Mine near Pretoria in South Africa.

Read more: Daily Mail

US$100 million from diamond sales goes missing

US$100 million realised from the auction of the Marange diamonds last year has allegedly gone missing, The Standard can reveal.

The offense only came to light after the Ministry of Finance was given a schedule from President Robert Mugabe’s office written by the Minerals Marketing Corporation of Zimbabwe alleging that it had given US$170 million to treasury.

According to impeccable sources within the Ministry of Finance, treasury was never given any such amount by MMCZ last year.
Minister of Finance Tendai Biti on Friday said government only received US$64 million from MMCZ, which mined the precious stones through two joint venture companies.

Biti said he has since asked the accountant-general to lau-nch an investigation to trace the missing cash.

“We got a schedule from the office of the President written by MMCZ that claimed treasury had been directly and indirectly given US$170 million from the sale of alluvial and kimberlite diamonds,” he said.

“Treasury only received US$64 million from the sale of alluvial and kimberlite diamonds.

“In that schedule MMCZ claims that treasury used part of the money to pay tax to Zimra.

“I have asked the accountant-general to launch an investigation into the matter disapproving MMCZ claims.

“The investigation will show that we did not get the money and my question is where did the money go?”

Last week Biti told The Standard that although diamonds were being sold there was no accountability.

There has been speculation that Zanu PF was looting money from the sale of diamonds to finance its election campaign among other things.
Deputy Minister in the Ministry of Mines Gift Chimanikire said he was not aware of the transaction adding that all he had in his office was a summary of the movement of funds obtained from the sale of diamonds last year and January 2011.

Efforts to get a comment from Chimanikire’s boss Mpofu were fruitless as his mobile phone was not reachable.

Permanent Secretary Thankful Musukutwa refused to comment yesterday saying he was just arriving from South Africa and he was not aware of the matter.

Zimbabwe held two diamond auctions last year under the supervision of the Kimberly Process.

It has since emerged that a third auction was held secretly and the matter only came to light when Mugabe promised to give US$250 million to civil servants.

Thursday, February 10, 2011

Diamonds, Breguet Watches Boost Hong Kong Retailers

Chinese tourists visiting Hong Kong in record numbers over the Lunar New Year holidays splurged on diamonds, cosmetics and watches, boosting retailers’ sales.

Chow Sang Sang Holdings International Ltd.’s revenue climbed 17 percent during the first week of the Lunar New Year and the 12 days leading up to it, according to Dennis Lau, the jeweler’s director of sales operations.

Greater China will be the world’s biggest market for high- end products in a decade, growing 21 percent a year on average, according to Aaron Fischer, a Hong Kong-based analyst at CLSA Ltd. That growth is a boon for Hong Kong, a favored destination for Chinese shoppers, where tax-free luxury goods cost 30 percent less on average and the risk of counterfeit products is low, Fischer said.

“Per-capita spending on watches in Hong Kong is off the charts,” Fischer said in a briefing today. While the Chinese have been big buyers of luxury goods for several years, “growth seems to be accelerating,” he said.

Visitor arrivals to the former British colony from mainland China during the country’s Feb. 2-8 holiday period reached a record 663,000, surpassing last year’s 570,000, according to data from the Hong Kong Immigration Department.

That helped retailers like Chow Sang Sang, where the biggest-ticket item sold during the period was a HK$300,000 ($38,500) diamond bought by a customer from mainland China, Lau said in a phone interview.

Breguet Watches

“Our sales representatives at the Rolex and Tudor boutique in Tsim Sha Tsui were so busy with customers that they had no breaks at all,” said Anna Luk, Emperor Watch & Jewellery Ltd.’s investor relations manager. LVMH Moet Hennessy Louis Vuitton SA, the world’s biggest luxury goods maker, owns a 7.4 percent stake in Emperor, whose market value more than doubled last year.

Breguet watches selling for more than HK$1 million were among the items snapped up by mainland Chinese, Luk said. Emperor, which has more than doubled in market value in the past year, fell 3.6 percent to close at HK$1.08 in Hong Kong trading.

Hong Kong, a southern Chinese city with a population of about 7 million, is the biggest market for Swiss watchmakers as retailers sell the timepieces to visitors from across the border.

About 20 percent of last year’s 16.2 billion Swiss francs worth of watch exports from Switzerland were to Hong Kong, or about double the share of the U.S., according to data from the Federation of the Swiss Watch Industry. Sales in mainland China -- which doesn’t include Hong Kong, Macau or Taiwan -- accounted for another 7 percent.

‘Wealth and Success’

“Chinese consumers love watches and jewelry for their intrinsic value, and accessories are great vehicles to display wealth and success,” CLSA analysts Fischer and Mariana Kou said in a research report last month. “Some 24 percent of people we surveyed that earn around 41,976 yuan ($6,400) per year said they would be willing to spend more than 50,000 yuan on a watch.”

Sa Sa International Holdings Ltd., a Hong Kong-based cosmetics and skin-care products retailer, increased sales more than 10 percent from last year’s holiday period.

Sa Sa fell 4.9 percent in Hong Kong trading, trimming its gain over the past year to 64 percent. Chow Sang Sang declined 2.4 percent and has climbed 83 percent over the past 12 months.

Retailers in the city are also benefiting as China’s currency strengthens against the Hong Kong dollar, increasing the purchasing power of visitors from the mainland. The yuan has gained 3.9 percent against Hong Kong’s currency in the past year.

Dior, Estee Lauder

A housewife from mainland China who only identified herself by her last name, Huang, said she planned to spend HK$100,000 during a two-day visit to Hong Kong.

“It’s much cheaper to buy in Hong Kong as the yuan is stronger,” she said, holding a shopping bag filled with Christian Dior clothes and Estee Lauder cosmetics as she walked around the Tsim Sha Tsui tourist district on Feb. 7. “I have spent HK$30,000 today so far.”

About 10 percent of global luxury goods sales are made in greater China, and the sector will be the fastest-growing consumer category over the next five years, Fischer and Kou said in their report. Including sales to Chinese tourists abroad would raise that number to 15 percent, they said.

“Given rising incomes and supportive social factors, we expect greater Chinese customers to account for 44 percent of global luxury sales by 2020,” the analysts wrote.

Endiama Diamond Company of Angola Expected to Produce 9M Carats in 2011

Angola's government-owned diamond mining company, Empresa Nacional de Diamantes de Angola (Endiama) expects diamond production to reach 9 million carats in 2011, the website reports, quoting an Angolan official who spoke at the International Mining Fair in Cape Town.

In 2010, Endiama – the world's fifth-largest diamond producer – recommenced production at three mines following the recovery in the global diamond industry that brought an increased demand for rough diamonds.

Antonio Jose Freitas said that Endiama expected revenue, as well as production, to rise in 2011 and noted that prices had already risen from $111 per carat at the end of 2010 to $134/carat in January.

Zim diamonds yet to get KP approval

Zimbabwe’s diamond exports are now at the mercy of the Democratic Republic of Congo (DRC), the new Kimberley Process (KP) chair.

The World Diamond Council (WDC) early this month quashed reports that the KP had given Zimbabwe the green light to trade its gems from the Chiadzwa fields saying the DRC had not yet given its formal and final approval.

The DRC’s Mathieu Yamba recently took over the KP chair from Israel. There was no immediate comment from Mines minister Obert Mpofu as he was not reachable on his mobile phone on Thursday.

“The authorities in Zimbabwe need to complete a series of consultations with the new KP chair from DRC, who has called for understanding and patience of the industry until conclusions are reached,” WDC said in a statement.

The apex industry organisation has made formal communication to the international diamond industry.

The WDC said until a conclusion was reached, exports of stocks and production from the approved concessions in Chiadzwa, Marange, would not carry the approval of the KP.

“In the meantime, we continue to advise members of the diamond industry that until a conclusion is reached exports of stocks and production from the approved concessions in Marange do not carry the approval of the Kimberley Process,” the WDC said.

“We will advise you as soon as the consultations have been concluded and a clear directive has been received from the chair.”

The move will deal a heavy blow to the Zimbabwe government which was hoping to raise money through diamond sales to pay its restive civil servants.

Diamond sales are also expected to help the recovery of the country’s economy, shattered by a decade-long political crisis.

Sources on Thursday said the new KP chair would most likely give a thumbs-up to the exports given the friendship between Harare and Kinshasa.

In 1997 the Zimbabwe military intervened to save the DRC government from being overrun by rebels who were supported by Rwanda and Uganda.

President Robert Mugabe deployed thousands of soldiers to save Kinshasa under the late Laurent Kabila.

News that the export of diamonds from Chiadzwa should be put on ice has adversely affected the diamond industry in India, the largest importer of the Zimbabwean gems.

According to an estimate, Zimbabwe has a stockpile of over six million carats of diamonds that was expected to flood the Indian market once given KP approval.

“This is a major setback. The industry, especially the diamantaires in Surat, was eagerly waiting for the Zimbabwean goods to flood the market in order to overcome the severe shortage of rough diamonds,” said Sanjay Kothari, vice-chairman of India’s Gems and Jewellery Export Promotion Council.

“The rough prices appreciated by almost 30% in 2010 due to the shortage and the prices were expected to increase throughout 2011. The deadlock over the export of diamonds from Zimbabwe will create a difficult situation for the diamantaires,” said Chandrakant Sanghavi, chairman of Sanghavi Exports in India.

In July last year, the KP Certification Scheme agreed that diamonds from Chiadzwa could be sold on the international market.

Two auctions were organised in September and October and about 90% of the precious stones worth $100 million were purchased by Indian diamond dealers.

But the regulator again imposed a ban in November last year.

Wednesday, February 9, 2011

Diamond Industry in Surat: WDC Statement on Zimbabwe Diamonds a "Setback"

The World Diamond Council's official statement last week that Zimbabwe has not yet been cleared to export its diamonds, despite a recent consensus vote by the Kimberley Process that approved a modified version of the Jerusalem Agreement that included concessions on monitoring, has left Surat's diamond industry up in the air and with a shortage of rough diamonds.

The Times of India called the WDC statement a "setback" for the Surat diamond sector, which is the biggest importer of Zimbabwe diamonds in the world. An estimated 6 million carats of rough diamonds meant for Surat are currently held up, pending KP approval.

Vice Chairman of India's Gems and Jewellery Export Promotion Council (GJEPC) Sanjay Kothari said that Surat, facing a "severe shortage" of rough diamonds, had been "eagerly awaiting" the shipments from Zimbabwe.

Shanghavi Exports Chairman Chandrakant Shaghavi told the Times that the rough shortage had driven prices up 30% in 2010, and that the industry expected prices to continue to climb in 2011.

Congo Seeks South Africa Bank Funds for Diamond Mines

The Democratic Republic of Congo’s state-owned diamond miner, MIBA, is in talks with South African banks to obtain funds to revive its operations, Mines Minister Martin Kabwelulu said.

“We need to find $150 million to $200 million to wake up this giant,” Kabwelulu said today at the Mining Indaba conference in Cape Town. Officials from MIBA are in South Africa to seek funding, he said.

Since the company closed its doors in November 2008, almost all of Congo’s diamond production has been artisanal, according to the Mines Ministry. Last November, Jeffrey Ovian, former Congo country director of First Quantum Minerals Ltd., became MIBA’s director. The company, based in the Eastern Kasai province in central Congo, is 20 percent owned by Mwana Africa Plc in London.

Congo, which is head of the Kimberley Process diamond certification scheme for 2011, gave MIBA $10 million in August.

The country’s role in the Kimberley Process will keep Congolese diamond mining under the spotlight this year, Alyson Warhurst, chief executive officer of the risk analysis and mapping firm Maplecroft, said today.

“The timing is good to demonstrate that good governance is in place for diamond operations,” Warhurst said by phone from Bath, England. “It’s only through investment and a particular framework whereby responsible businesses could invest in DRC that diamonds could contribute to its development.”

Rio Tinto Plc is seeking partners for diamond and copper projects in Congo, Kevin Fox, project manager at the company, said in a speech at Indaba today. On Jan. 28, BRC Diamondcore Ltd. announced it had resumed diamond operations in Congo and entered into a new joint venture arrangement with Rio Tinto Mining and Exploration Ltd.

Zimbabwe hikes diamond, coal and mining exploration fees

Effort to discourage companies from speculating on mining claims

Zimbabwe has increased exploration fees significantly for diamond and coal exploration in an attempt to discourage companies from speculating on mining claims. The government says several companies hold mining claims for speculation and that the increase in fees is seen as discouraging the practice.

State-owned newspaper The Herald revealed that the exploration fee for diamonds had increased twenty-fold to $1 million, while coal increased five-fold to $100,000. The Harare-based newspaper also revealed that various minerals including gold and chrome have also been affected.

In a move to try and discourage and curb speculation in the mining sector, Mines and Mining Development Deputy Minister Gift Chimanikire said the adjustment would help the government attract serious investors.

“We have companies and individuals who are holding onto unused mining claims. We want serious investors in the mining sector.

“Currently, we have various mining houses who are just holding claims. This will not help the economy. We want mining for development,” said Chimanikire.

Zimbabwe has vast mineral reserves and some of the world's biggest diamond and platinum deposits, which is of great interest to multi-national companies looking to invest in the mining sector. However, investigations by the Government revealed certain claim holders were clinging to undeveloped mining ground for such speculative investment reasons and were happy to simply pay insignificant claim renewal fees.

Tuesday, February 8, 2011

BCP meets with Gem Diamonds

The management of Gem Diamonds met with Botswana Congress Party leadership to brief them about their preparation for the operations of Gope Mine inside the Central Kgalagadi Game Reserve (CKGR).

The BCP was represented by Secretary General Dr Kesitegile Gobotswang and Vice President Ephraim Setshwaelo while the diamond mining company sent its Managing Director Hail Mphusu and Operations Manager Howard Marsden to the meeting.

The meeting was organized by Seed Communications which has been engaged by Gem Diamonds as its public relations company.

The Government of Botswana recently granted a mining licence to Gem Diamonds despite the denials some years ago that there was diamond prospecting inside CKGR.

Despite the persistent denials the establishment of the huge US$3 billion mine near the Basarwa community of Gope was approved last month.

The life of the mine at Gope is currently estimated to be in excess of 30 years.

Details of the mine plan and the relevant staged capital expenditure will be released at the time of the announcement of the Company’s 2010 results on 15 March 2011, the company announced. Gobotswang confirmed that the meeting which took place last week Wednesday was to brief them about what the company has been doing in preparation for the mining activity.

This involves consultation with the relevant communities and issues of Environmental Assessment Plan (EAP). Gobotswang said his party pointed out its concerns to the leadership of Gem Diamonds. “We told them issue of relocation has not been resolved. They are going to contend with issue of Basarwa of CKGR and their relocation.

“We told them we as the BCP have taken a liberal interpretation of 2006 court judgment,” said Gobotswang of the judgment that ruled that Basarwa’s forced relocation from the reserve was illegal. He also said they told the company representatives that in fact the latest Court of Appeal judgment also showed that to the case. Basarwa two weeks ago registered a major victory against the government when they won an appeal to have access to a borehole inside the reserve.

A panel of five judges ruled that the appellants have a right at their own costs to re-commission the borehole at Mothomelo in the CKGR and to sink more boreholes at any suitable site inside the reserve. The other issue raised by BCP was the issue of informed consent, because the party believes when a multiparty cooperation consults with the marginalized and oppressed people like Basarwa “it raises into question whether they really [Basarwa] consented”.

The party also said it drew attention of Gem Diamonds’ to the fact that existing international conventions on the protection and promotion of indigenous populations supported the contention that the mining company needed to have taken that into account.

The party also questioned the company’s close association with Department of Wildlife and National Parks because the BCP feels the department’s hands are not clean.

“There are persistent claims that they are brutalizing, harassing and humiliating those people in the CKGR.” Gobotswang admitted that the meeting was useful to the party.

“In our minds we had thought there was going to be a township like in other places where there is mining. They told us there is going to be temporary structure for the duration of the lifespan of the mine which is 30 years,” he revealed.


Now, (pink) diamonds may be investor's best friend too!

Marilyn Monroe's famous song “Diamonds are a girl's best friend' will soon have new lyrics. Something like "Diamonds are an investor's best friend".

Pink diamonds, are a rare form of the hardest stone on earth, found only in Australia. These stones are 20 times more expensive than traditional white diamonds. And forget the ladies, hardened Indian investors may soon be swooning over these stones.

Josephine Acher, business manager at Argyle Pink Diamonds says “Last year, we published an index of the performance of the tender quality pink diamonds, which are our finest pink diamonds. We release only 50 a year and every year they have out performed white diamonds price indexes.

With a 25% growth rate, India’s diamond market is the fastest growing in the world and is currently worth over Rs 25,000 crore. Experts say pink diamonds could step on the accelerator nicely.

Archer says, “If I talk about the investment appeal of Argyle pink diamonds, there's growing interest in that. Saying growing interest from india, and not just from the jewellery market but from the investor market. You may buy a loose pink diamond and not even said it in a piece of jewellery. Just keep it in a safe as a store of wealth.”

Not surprising, considering there are almost 130,000 millionaire households in India who can afford these diamonds. The price tag ranges from Rs 10 lakh for certain stones, while pieces like this Shalimar ring can get over Rs 10 crore rupees.

Charles Taylor tribunal dominated by Naomi Campbell

The “dirty stones” allegedly given to Naomi Campbell by Charles Taylor, the African warlord, have dominated his UN trial for crimes against humanity in Sierra Leone.

The incident at a star studded gala banquet hosted by Nelson Mandela in 1997 has overshadowed harrowing testimony from victims linking the former Liberian president to war crimes and mass amputations carried out by Sierra Leone’s RUF rebels.

The link is critical because Mr Taylor, 63, is accused by prosecutors of trading in “blood diamonds” to fund Sierra Leone brutal and bloody civil war, in which 120,000 people died over 10 years.

Testimony from Miss Campbell and Mia Farrow, the American actress, who was also present at the dinner, has provided headlines for a case, the first prosecution of a former African head of state, that has often struggled to grab the world’s attention.

Last August, Miss Campbell, the model, known for wearing expensive jewellery, said that she had been given some uncut stones as an unsolicited gift form an unknown admirer after the event hosted by Mr Mandela but she did not know they were diamonds.

“They were very, small, dirty looking stones. They were kind of dirty looking pebbles. They were dirty. I don’t know, when I’m used to seeing diamonds, I am used to seeing diamonds shiny and in a box,” she said.

Miss Farrow has accused the supermodel of lying in her evidence that described Miss Campbell excitedly describing the gift of diamonds.

“As I recall it she was quite excited and said, 'oh my god, in the middle of night I was awakened by knocking at the door. It was men sent by Charles Taylor and he sent me a huge diamond’,” she said.

UN judges are likely to rule on whose story the court believed in June.

The value of diamonds looted by Sierra Leone’s rebels and allegedly traded for weapons with Mr Taylor, a warlord and then president in neighbouring Liberia, could have been as high as £950 million.

For most of the 11 year period of the conflict in Sierra Leone, the country’s diamond producing zones, which account for two per cent of the world’s production, were in control of the Revolutionary United Front, the insurgents supported by Mr Taylor.

The trade in 1999, at the height of the conflict, was estimated by the World bank to have been potentially worth $138 million a year. Instead of helping Sierra Leone, the world’s poorest country, the diamonds were siphoned off to arm and supply the rebels that left 120,000 people dead and millions homeless.

The popular Hollywood film, Blood Diamond, starring Leonardo DiCaprio, dramatised the role of the gemstone in Sierra Leone’s civil war, which took place between 1991 and 2001. Blood or conflict diamonds are the name for gems mined illegally, and often under violent coercion, in African warzones.

The diamonds are then used to fund warlords or insurgents trying to take over a country. The trade in conflict diamonds has been blamed for fuelling conflicts in Angola, Liberia, Sierra Leone, Cote d’Ivoire and the Congo.

Following the Sierra Leone war, the UN set up the Kimberley Process to regulate the trade in uncut or rough diamonds. The new rules are implemented in 75 countries, including all European nations, which account for 99.8 per cent of the world’s rough diamonds.

Miss Campbell’s gems have been handed over to the authorities in South Africa for analysis after she gave them to a children’s charity organiser.

By Bruno Waterfield, Brussels