Thursday, September 27, 2012

Botswana handholds Swazis into diamonds

Botswana has been hailed for its instrumental role in the resuscitation of diamond mining in Swaziland through provision of support for the enactment of key legislation and benchmarking.

Swazi government mining engineer, Sam Ntshalintshali has told Mmegi Business that Botswana played a key role in the formulation of his country's Diamond Act last week and Swaziland's admission into the Kimberley Process Certification Scheme (KPCS), a global initiative to stamp out trade in conflict or illicit diamonds. Membership of the Scheme is a pre-requisite for a country's success in diamond trade as the Kimberley Process represents all diamond producing and consuming countries and civil society monitors. This week, Ntshalintshali led a four-member Swazi government delegation in Gaborone to gather more information on diamond value addition. The visit capped a long bilateral effort starting at ministerial level.
"We consulted with Botswana because we know that this country is one that is moving and developing its mining in a way unlike the rest of Africa where resources are simply shipped out," he said.  "Botswana helped in the drafting of the legislation and policies for diamond mining. We invited Botswana as one of the stakeholders we consulted with in the process of updating our policy framework."
Ntshalintshali explained that until 1997, Swaziland used to have an open cast diamond mine, which closed when its operator found the costs of going underground unviable. The regulatory framework and KPCS membership are designed to pave way for the revival of diamond mining activities.
"We had laws but they became outdated and did not take the prevailing environment and international trends into account," explained the engineer. "We thus had to review these, starting with consultations with the various stakeholders from the public to the industry and others. Botswana came in during these consultations."
Ntshalintshali stated that companies had already expressed interest in mining the waste left behind by the 1997 operations, using improved technology to extract diamonds. He added that the new policy framework would allow for the issuance of prospecting and mining licences in diamonds.
During a meeting between the Swazi delegation and members of the Botswana Diamond Manufacturers Association (BDMA), it emerged that with Botswana's guidance, Swaziland's legislation has been drafted in such a way that diamond production will take place alongside cutting and polishing activities. The legislation covers the percentages of royalties, taxes and shareholding Swaziland will levy and take up in diamond industry entities.
Members of the delegation asked about price discovery in the diamond industry, as Swaziland looks to ensure that its stones are traded at optimal value to the economy."In the diamond industry, market price is not an easy matter to arrive at," responded Steinmetz Botswana managing director, Kfir Teichman.
"You can get a stone, give it to five different professionals and you'll get 20 or 30 percent differences in valuation.Every stone is different and this is not like other commodities where there is a known market price."
Swaziland is hoping the resuscitation of diamond mining will boost its economy by raising export revenues, driving downstream industry and also reducing unemployment.

Wednesday, September 26, 2012

158.2 carat diamond found in Russia

The precious 158.2 carat gem was uncovered by the Alrosa company, the country's largest diamond mining enterprise, it was revealed today
Russia's largest diamond miner Alrosa discovered a unique
diamond weighing 158.2 carats and worth over $1.5 million, 
the company said Tuesday.

"In the estimate of Alrosa's specialists, this diamond may be sold for over $1.5 million at auction. This diamond, if it is processed, may also produce several quality diamonds, each of them worth over several hundred thousand US dollars," Alrosa said in the statement.

Alrosa is one of the world's largest diamond companies, accounting for about 28 percent of global production, and produces 97 percent of all diamonds in Russia. The company boasts proven diamond reserves that enable it to maintain diamond production for over 25 years.

Monday, September 24, 2012

Petra Diamonds glitters on rough day for miners

On a weak day for the wider mining sector, Petra Diamonds was on glittering form as investors shrugged off news of a full-year loss at the FTSE 250 group.
The rough diamond supplier, which operates seven South African mines, climbed 8.3 – or 7.6pc – to 118p, the biggest riser on the mid-cap index, after reporting a 44pc rise in full-year revenues and forecasting an increase of about 30pc in production next year. The shares advanced even though the group posted a loss after tax of $2.1m (£1.3m), with profits hurt by foreign exchange movements.
Analysts noted the group managed to meet its latest guidance despite the recent weakness in diamond markets. Chief executive Johan Dippenaar told Bloomberg he was seeing “some green shoots” in the market after prices dropped earlier this year.
However, while investors couldn’t resist the lure of precious gems, overall it was a poor session for the miners, which were once again hurt by economic concerns and analyst downgrades.
ENRC fell 13.9 to 330.6p, the worst-performer on the blue-chip index, and Evraz slipped 10.4 to 261½p. That weighed on the wider FTSE 100, which shed 13.78 points to 5,838.84, while the mid-cap FTSE 250 lost 46.92 to 11,903.11.
JP Morgan said global growth, in particular China, would be the key factor for miners, rather than quantitative easing in the US.
“Until more clarity emerges around the Chinese growth picture and potential stimulus measures, which we suspect will not come until later in the year after the leadership changeover in mid-October, we suspect QE3 will provide a floor for the sector but not necessarily drive substantial forward momentum,” the bank said.
JP Morgan added that Anglo American, down 50½p at £18.87½, as well as Kazakhmys, 15 lower at 714p, were companies to avoid.
Anglo American was also put under pressure by Bank of America Merrill Lynch, which cut its recommendation on the miner to “neutral” from “buy” because of the disruption at its South African platinum operations. The miner had set today’s night shift as the deadline for striking workers to return to their posts.
Rio Tinto lost ground too as broker Citigroup downgraded the miner to “neutral” from “buy”, arguing that the “long term outlook for Chinese steel consumption has become increasingly uncertain”. The company declined 61p to £29.80.

Sunday, September 23, 2012

Archduke Joseph Diamond for sale.

Archduke Joseph Diamond will be offered at auction in Geneva in November 2012. 

Diamond Firm Offers ‘Star of David’ Gem

A Canadian diamond firm says it has designed a diamond that that can be cut to show the six-pointed Star of David.
A Canadian diamond firm says it has designed a diamond that that can be cut to show the six-pointed Star of David.
Embee Diamond Technologies, based in the Canadian province of Saskatchewan, announced it is offering the design to any manufacturer who is willing to make a 1 percent contribution to the Israeli-based Magen David Adom rescue services.
The Star of David, known in Hebrew as the Magen David, is a Jewish symbol that also highlights the Israeli flag.
Embee said that that the symbol “is affixed to the pavilion of this diamond so that its reflection is clearly visible within the table as well as throughout the entire stone.”
It was designed by Embee's diamond cutter Mike Both, who designed the Sinius star in 2006.
The company explained that despite the application of state-of-the-art diamond modeling techniques and modern cut performance analysis, “Even when perfectly cut, the standard shapes of diamonds are asymmetrical.”
“The tops of these diamonds have stars, mains and girdle facets. The bottoms have only mains and girdle facets. Mike simply added bright stars on the bottom,” according to Embee.

Thursday, September 20, 2012

New chapter as diamond bourse sets up

The value addition of the diamond industry in Botswana took yet another leap yesterday with the announcement that a state of the art building housing a trade exchange for the precious stones is now complete.

Yesterday, Diamond Technology Park (DTP) chief executive officer, Rutang Moses said an occupational certificate for the building had been issued on August 01, marking a milestone in Botswanas journey to become a centre of global diamond trade. With the bourse's establishment, Botswana now boasts diamond production, cutting and polishing, jewellery manufacturing and finally rough diamond trade, being the majority of activities along the diamond industry value chain.

When fully functional, the bourse will provide a platform for producers, brokers, valuers and traders, with two tenants having already taken up residence in the building.  It is expected that producers such as Firestone Diamonds and Lucara Diamonds will move their auctions to the new high-tech bourse, with buyers jetting in and out to participate in tenders. "This will make Botswana a vibrant market for diamonds," Moses told journalists.

"We are just providing the facility and are hands off in terms of its operation, which will be done by the producers and their stakeholders. "We have established this facility as turnkey and we are talking to different companies in terms of using that tender platform.

"Our strategy is to make sure that the DTP is aligned to diamond industry growth," she said. An official launch of the new building is expected as soon as full operations by its tenants commence. Designed after architectural benchmarking in Israel, Belgium and South Africa, Moses said the bourse would provide privacy for those using it for office space and those holding their tenders there.
 At present in Botswana, only Firestone Diamonds and Lucara Diamonds are holding diamond auctions outside of the Diamond Trading Company (DTC) system owned and controlled by De Beers.   Debswana, the country's biggest diamond producer, auctions its stones through the DTC system, being a De Beers subsidiary, although a window exists for government to sell 10 percent of Debswana production independent of the DTC system.

It is expected that government will auction its allocation of Debswana production through the new bourse. Moses said besides the bourse, the DTP was also expanding its office space, utilising the 12,000 square metres left on its plot situated along Airport Road.

"We are building the DTP in stages according to the needs of the industry," she said.  "First was to make sure there was a secure environment, then second was diamond activities provided by the bourse. The expansion of office space is part of the second phase of that strategy." The expansion of the DTP is also in preparation for the higher business activities linked to the relocation of DTC aggregation from London to Gaborone next year.The DTP is a private initiative funded by Safdico, a Diamond Trading Company Botswana sightholder with offices and facilities in Gaborone, Antwerp, Geneva, Johannesburg, London, New York, Tel Aviv and Mauritius.

Wednesday, September 19, 2012

High Diamond Grade and Large Diamonds from Bulk Sampling of the Katcha Dyke

stellar diamonds
Stellar Diamonds plc, the London listed (AIM: STEL) diamond development company focused on West Africa, is pleased to announce final bulk sampling results from the Katcha Dyke at the Company's Droujba kimberlite project in Guinea.
  • 482 carats recovered from 299 tonnes of kimberlite for grade of 161cpht (+1mm)
  • Diamonds recovered of 15.8ct, 10.45ct, 5.5ct and 4.85ct, with 44 stones greater than 1ct
  • Two kimberlite samples weighing a total of 296kg submitted for microdiamond analysis
  • Resource to be calculated on initial 500m section of 5km long Katcha Dyke
  • Katcha is adjacent to the Droujba Pipe which has a JORC Compliant resource of 2,474,000cts
Chief Executive Karl Smithson commented:
"The high grades from bulk sampling at the Katcha Dyke demonstrate its potential to enlarge the Droujba project resource base. The presence of several large near gem quality diamonds up to 15.8 carats in size from this relatively small diamond parcel is further cause for encouragement.
"Bulk sampling is on-going at the Droujba Pipe in order to obtain a 2,000 carat parcel for valuation. We remain on track to complete this programme this month in order that an independent resource statement can be prepared which will include the 500m drilled section of the Katcha Dyke.
"Considerable progress has been made in recent months on our priority Tongo and Droujba kimberlite projects and we look forward to updating shareholders as we progress."
Katcha Bulk Sampling and Results
As announced on the 6th August 2012, a series of bulk samples were collected from a 100m strike length of the Katcha Dyke located some 600m to the northwest of the Droujba Pipe. All these samples have now been processed and the results collated (see table below).
A total of five samples comprising 299.14 tonnes of in-situ kimberlite material have been collected and processed by the Company's on-site 5 tonne per hour DMS plant with diamond recovery being by X-Ray Flowsort under observation from the Government mines observer. These samples were collected from the same section of the Katcha Dyke at approximately 20m intervals over a total distance of 100m. The kimberlite dyke varied in average width from 41cm to 141cm over the five 20m sections that were sampled. Each sample was carefully measured and its density and moisture content calculated so that the in-situ kimberlite tonnage could be accurately determined.
The processing yielded a total of 482.45 carats from the 299.14 tonnes of kimberlite to give an in-situ kimberlite grade of 161.28cpht (+1mm) for the composite five samples. Some 44 stones of greater than one carat were recovered, with 14 of these weighing in excess of two carats. The largest stones weigh 15.8ct (near gem), 10.45ct (rejection), 5.5ct (gem), 4.85ct (rejection). The diamonds will be exported to Antwerp in the near future for valuation.
Dry Tonnes processed
Carats Recovered
+1mm dry grade (cpht)
Katcha Bulk Sample KBS-1A
Katcha Bulk Sample KBS-1B
Katcha Bulk Sample KBS-1C
Katcha Bulk Sample KBS-1D
Katcha Bulk Sample KBS-1E
Totals and average grade
Microdiamond Sampling
Processing of two sets of microdiamond samples is ongoing at the Saskatchewan Research Council laboratory in Canada, with results expected in the near future. These samples comprise 250kg (wet weight) of kimberlite collected from the surface trench of the bulk sampling and 46kg (wet weight) of kimberlite core collected from the seven drill holes that intersected the Katcha Dyke.
Updated Resource Statement
CAE Mining Africa has been retained to provide an updated resource statement for the Droujba project taking into consideration the additional bulk sampling information for both the Droujba Pipe and Katcha Dyke, and in terms of Katcha the drilling information and the microdiamond analysis.
As announced on the 2nd April 2012, the Droujba project currently has a JORC compliant inferred resource of 2.474 million carats for the Droujba Pipe only to a depth of 360m, with a modeled resource grade of 70cpht and average modeled diamond value of $60 per carat.
In accordance with the AIM Rules for Companies, the information in this announcement has been reviewed by Karl Smithson, Chief Executive of Stellar, a qualified geologist and Fellow of the Institute of Materials, Metals, Mining, with 23 years' experience.
About Stellar Diamonds plc
Stellar is a London (AIM: STEL) listed West African focussed diamond mining and exploration company which is advancing the Droujba kimberlite pipe in Guinea and the Tongo kimberlite dyke project in Sierra Leone, which combined have a JORC Compliant, inferred diamond resource of 3.1 million carats. The Company recently announced a dispute with the Ministry of Mines in Sierra Leone over its two Kono licences.

Tuesday, September 18, 2012

Diamond field with trillions of carats found in Siberia

A diamond field containing trillions of carats has been discovered hidden under a giant meteorite crater in Siberia, Russian scientists have disclosed. Hidden treasures: A aerial view of the 35-mile-wide Popigai Astroblem crater which contains enough diamonds to supply global markets for the next 3,000 years

Specialists say the diamonds, which are "twice as hard as normal", could be used for industrial purpose but not for jewellery.
The stones were created by the impact of a bolide – a large projectile – smashing into the Earth 35 million years ago, leaving the 62-mile wide Popigay crater under which they are buried.
The existence of the diamonds was known in Soviet times but this is the first occasion the full scale of the deposit has been disclosed.
"The resources of super-hard diamonds contained in rocks of the Popigay crypto-explosion structure are ten times bigger than the world's entire known reserves," Nikolai Pokhilenko, head of the Geological and Mineralogical Institute in Novosibirsk, told a state news agency. "We are talking about trillions of carats. By comparison, the known reserves in Yakutia today are estimated at one billion carats."
Russia's state-controlled diamond mining company Alrosa is the largest in the world having overtaken South African giant De Beers in 2009. It is based in Yakutia, a vast region of eastern Siberia stretching to the Arctic Ocean.
Mr Pokhilenko said the first results of tests on the Popigay deposit on the edge of Yakutia and Krasnoyarsk regions "were enough to talk about the possibility of a revolution on the world diamond market".
The grain size and abrasiveness of the impact diamonds made them particularly useful for industrial use, in particular metal-cutting, he added. A research team from his institute and Alrosa will be sent to make further studies.
Experts pointed out that the diamonds would not affect the gemstone market and there were question marks over how profitable it would be to mine the stones.
Most diamonds for technological use are grown in laboratories and industrial stones are usually only extracted from the ground as a by-product of mining for much more lucrative gemstone diamonds.
The Popigay crater is the seventh largest impact crater in the world.
Diamonds were created in graphite deposits by the force of the bolide striking the ground.

Monday, September 17, 2012

Lucara Diamond completes trial mining at Lesotho project

Tripple-listed Lucara Diamond on Monday said a second auction of diamonds from its Mothae project, in Lesotho, which was held in Antwerp, Belgium, last week, brought to an end the project’s trial mining programme.
"The completion of the trial mining programme at Mothae marks a significant milestone in the project's development. We have now sold in excess of 20 000 ct of Mothae diamonds, the results of which would form a solid foundation for revenue modelling in our economic evaluation of the project,” Lucara CEO William Lamb said in a statement.
He added that the information gleaned from the trial mining programme, together with a better constrained geologic and grade model and the processing of unweathered kimberlite, which made up the bulk of the Mothae deposit, would provide all of the necessary inputs for a thorough economic assessment.
The Toronto- New York- and Gaborone-listed company said it a total of 4 657 ct of diamonds were sold for gross proceeds of $1.51-million, yielding an average price of $324/ct.
The diamond sale consisted of 32 sales parcels of which 26 were sold on a sealed tender. The highest value stone sold was a 9.74 ct Type IIA diamond, one of the finest, which achieved a price of $272 720 or $28 000/ct.
The Mothae processing facility would now, with the consent of the Lesotho government, be placed on care-and-maintenance while the company worked towards completing a preliminary economic assessment (PEA) of the project.
Lucara said the PEA was well advanced and it, together with a National Instrument 43-101-compliant independent technical report, was expected to be complete in the first quarter of 2013.
Lucara subsidiary Mothae Diamonds is jointly held by Lucara (75%) and the Lesotho government (25%).
The company’s Toronto-traded stock closed at 75 Canadian cents a share on Monday.

Thursday, September 13, 2012

Rio Tinto Sees Strong Fundamentals For Its Diamonds Business

Anglo-Australian mining giant Rio Tinto plc  said Wednesday that it sees strong long-term fundamentals for its diamonds business as demand from China and India continues to surge.
However, the company projects supply of diamonds to be flat over the next decade due to lack of significant discoveries in the last decade and long lead times for bringing discoveries to commercial production.
In late March, Rio Tinto said it was looking into selling its diamond business and commenced a strategic review of the business. The company also said the business will operate as usual until the completion of the review of the diamonds portfolio, which is expected to take some time.
Rio Tinto's larger rival, BHP Billiton Group (BHP, BLT.L, BHP.AX, BBL, BHPBF.PK) said in November 2011 that it has commenced a process to sell its diamond mining assets in Canada.
Rio Tinto is the third-largest producer of rough diamonds in the world by volume, behind Alrosa Co. and De Beers, and also the world's largest producer of colored diamonds. In 2011, the company's production of diamonds was 11.7 million carats, while revenues from the business were $726 million.
The diamonds business includes Rio Tinto's 100 percent interests in the Argyle Diamond Mine in Australia and the Bunder Diamond Mine in India, as well as its 60 percent interest in the Diavik Diamond Mine in Canada and 78 percent interest in the Murowa Diamond Mine in Zimbabwe.
The company also operates a niche cutting and polishing factory in Perth for the rare pink diamonds from its Argyle mine.
In a slide presentation released to the Australian Securities Exchange on Wednesday, Rio Tinto said it is still reviewing all options for the diamonds business, including a sale. However, the company added that it did not face any time pressure for a transaction.
Rio Tinto expects significant growth in diamond production over the next five years. The company added that long term demand will be driven by growth in emerging markets, but noted that little new supply was coming on line.
According to the company, India and China are expected to grow to around 40 percent of the diamond jewelry market by value by 2020. The company also expects the U.S. to remain a key market for diamond jewelry.
However, Rio Tinto expects China to surpass the size of the U.S. market by 2025, and other markets to move in line with GDP growth.
Rio Tinto also forecasts prices to increase over the next decade, due to significant and growing supply deficit.
Separately, NRW Holdings Ltd. said it has been awarded A$133 million of works for Rio Tinto Iron Ore's Cape Lambert Port B 353Mtpa project. NRW is a provider of contract services to the resources and infrastructure sectors in Australia and internationally.
The company noted that the works, which will be undertaken over 48 weeks, include the CLB353 stockyard, conveyor link earthworks, relocation of water pipelines and rail formation earthworks.
In Thursday's regular session on the Australian Securities Exchange, RIO.AX is trading at A$55.39, up A$0.30 or 0.54 percent on 1.26 million shares.

Wednesday, September 12, 2012

UN Extends Presence in Sierra Leone to March 2013

The UN Security Council extended its mission assisting Sierra Leone with peacebuilding and long-term development efforts through March 2013, and called on all parties involved to ensure that upcoming elections are held in a peaceful, inclusive and credible manner. Sierra Leone will hold four elections on November 17, namely presidential, parliamentary, local council and mayoral,  marking a crucial test for this country as it continues to rebuild after the devastating civil war that ended in 2002.
In a unanimously adopted resolution today, the Security Council extended its mandate of the UN Integrated Peacebuilding Office in Sierra Leone (UNIPSIL) and requested the mission, along with the UN country team and the international community,  provide assistance to the government in preparing for the polls.
It also called upon the government, all political parties and the people of Sierra Leone “to continue to foster an environment that is conducive to  holding  peaceful, inclusive and credible elections, including through open, genuine and inclusive dialog to address possible differences, and to respect the outcome of the elections.”
Yesterday, the top UN envoy in Sierra Leone, Jens Anders Toyberg-Frandzen,  reported to the Security Council that the major electoral arrangements,  technical assistance from the UN, training of the police and the provision of the necessary logistics are on track. He added that the polls are an opportunity to further consolidate peace and the achievements of the past decade.
“The successful conduct of elections will demonstrate the maturity of Sierra Leone’s political leadership and institutions, as well as the consolidation of the democratic process in the country,” he stated.

Tuesday, September 11, 2012

Hong Kong show may help diamond industry regain shine

Reeling under 'self-made' liquidity crisis and falling prices of polished gems, diamond industry in Surat is now hoping that the upcoming Hong Kong Jewellery and Gem Fair will help them script a turnaround story.
The fair to be held from September 19 to September 23 is world's biggest gems and jewellery event with over 3,300 exhibitors from about 46 countries in the world and over 50,000 buyers from more than 135 countries. The fair's September schedule makes it ideal for jewellers replenishing stocks for peak shopping seasons such as Christmas, New Year and Valentine's Day.
For the first time in six months, there is a sense of optimism among diamantaires that the jewellery show may boost their industry and that there are indications that the 'green shoots' of recovery are emerging.
"The success of HK jewellery show will decide the fate of the Indian diamond industry for the rest of 2012," said Sanjay Kothari, vice-chairman, Gems and Jewellery Export Promotion Council (GJEPC). "The market is recovering and we hope the upcoming Christmas festival to remain successful," he added.
Nevertheless, with just few days to go for Hong Kong show, the diamond jewellery consumer market in Asia, the biggest market after US, is seeing signs of recovery with the prices of polished diamond moving up following the inquiries from the buyers.
Vijay Sheth, chairman of Carbon Craft, a Hong Kong-based diamond firm told TOI, "The Asian market is in a recovery mode ahead of the event. The buyer inquiries have increased over the past one week and we hope the show will further spur demand for polished diamonds and jewellery in Asia."
It was first time since the global economic downturn in 2008, the export of polished diamonds decreased by a staggering 42 per cent at $4.8 billion in the last four months since April-2012 compared to $8.3 billion during the same period in the previous year in 2011.
Industry sources said the dealers and jewellery companies in US, China, Belgium and UAE are grappling with rising diamond inventories and falling prices, as the slack global economy prolongs a year-long slump. It is estimated that about $20-$25 billion worth of polished diamonds are in the diamond inventories.

Monday, September 10, 2012

De Beers Diamond Jewellers Unveils 'Imaginary Nature' in Asia

De Beers Diamond Jewellers unveiled its jewelry collection, Imaginary Nature, for the first time in Asia today. The event was attended by award-winning actress, Gigi Leung and Taiwanese actress and model Bianca Bai. De Beers stated that the Imaginary Nature collection exhibits a journey of light, where heightened imagination meets natural beauty with diamonds. de beers jewellers
Francois Delage, the chief executive of De Beers Diamonds Jewellers, said,  “We wanted, through Imaginary Nature, to truly establish our legitimacy as a jeweler and to express our vision through a strong creative and contemporary gesture. Our unique designs inspired by our DNA bring to life our brand essence – The Jeweller of Light – by creating exquisite pieces, moments and movements from a journey from earth to light. The eight one-of-a-kind creations sublime our diamond mastery and jewelry know-how, and we are delighted to now unveil them in Asia.”
Each Imaginary Nature piece balances the contrasts of the natural world with the drama of an ascent and the grace of gliding, according to De Beers. These rich contradictions are conveyed through an array of diamond cuts and settings.  Radiant pear-cut diamonds were set on a tilt in a way to  engage light and trace movement.  By contrast, the definite angles of the baguettes against  round brilliant diamonds punctuate each piece with tradition and brilliance.
Leung (pictured) said, “It is so refreshing to see a contemporary take on high jewelry, the three-dimensional aspect and the interplay of light between different diamond cuts is truly unique.”
Hollie Bonneville-Barden, the jewelry designer, added, “Imaginary Nature represents an exhilarating yet elegant display of evolution, inspired by the beauty of transformations within nature, which are realized in a story of metamorphosis. Each piece reveals a unique gesture inspired by the essence of nature. With the diamond as our muse, the collection is centered on diamonds of character, focused on pears and baguettes to create a language of movement and fluidity.”


Sunday, September 9, 2012

Investment: Diamonds may take over from precious metals

As currencies fluctuate and the global economic crisis rumbles on, wealthy investors have increasingly focused on commodities for protecting their assets.
Until recently – in precious metals terms – this centred on gold and silver, but a new clutch of proposed diamond hedge funds is aiming to overtake precious metals as the new hot investment.
In the US, where there is only retail trading of diamonds, IndexIQ, a New York company, is supporting the first diamond-backed exchange-traded fund. The proposal is being reviewed by the Securities and Exchange Commission. Harry Winston, the largest publicly traded diamond company, is also collaborating with a Swiss asset manager on a $250m fund to buy diamonds wholesale to store in a vault, using money from hedge fund investments.
Peter Laib, chairman of Diamond Asset Advisors, the Swiss group collaborating with the company, says: “After the subprime disaster and with economic uncertainty, investors are looking for low-volatility investments. Diamonds are less volatile, as they’re resistant to speculation by the financial community, so there are no derivatives or tradeable products and no short selling is possible.”
He says the fund could offer annual returns of as much as 12 per cent.
Diamonds have shown consistent growth over the years, polished diamond prices have grown 100 per cent since 2004, and this only looks set to continue.”
Diamond prices are certainly on a trajectory. Prices of ½-carat diamonds have risen by 49 per cent since 2001. One-carat diamonds have risen by 88.9 per cent in the same period. Meanwhile, three-carat diamonds have gone up a staggering 238 per cent over the same timeframe.
Pressure on supply is one factor driving prices, says Mr Laib. “Supply constraints are a big factor, with few or no mines expected to emerge in the next 10 years and existing mines past their peak, meaning supply will decline.” He says the supply-demand gap could add as much as a 3 to 4 per cent premium to diamonds over the next few years.
Until just over a decade ago, De Beers, which controlled 80 per cent of the diamond market, largely dictated prices. But a turning point came in 2001, when the company went private. It had previously held stockpiles of diamonds, but when it went private and took on debt, it was forced to sell these, keeping prices flat.
Mr Laib notes: “Once that stockpile was depleted, prices started to rise again, as market forces took control. De Beers now controls 40 per cent of the market. Things have fundamentally changed. The market is now liquid and transparent.”
Will diamond investments succeed in taking over from gold? One director of a prominent independent financial adviser has expressed concern over being able accurately to apply fixed values to diamonds in index form, as with gold. “Diamonds are different. Each is unique, and has different facets. They should almost be appraised as works of art. It’s not like gold, where there’s the weight, and that’s it,” he says. “There’s such a variety of factors with stones. Gold is gold is gold. Diamonds are higher risk because the pricing is opaque.”
There is no doubt that wealthy investors are becoming more open-minded about the commodities they invest in. Anxiety about international currencies has seen interest in collectables and luxury goods grow.
According to research this year by Barclays Wealth, the world’s millionaires are devoting an average of 9.6 per cent of their fortunes to non-financial assets such as collectables.
Rare sports cars and art works are achieving record sales figures. Art too, has become a big focus. This year, a version of Edvard Munch’s painting The Scream sold for a record $120m at auction in 12 minutes. “People are seeking to diversify their portfolios,” says the adviser.
High-profile estate jewellery pieces are also in high demand. In December 2011, Elizabeth Taylor’s jewellery collection broke all records, achieving $157m.
“Diamond prices were up before these hedge funds. People want concrete investments that are also portable,” says Rahul Kadakia, head of fine jewellery at Christie’s auction house. “In 1996, Christie’s sold $273m worth of jewels globally. In 2011, that reached $605m. In the first half of this year we’ve sold $305m.”
Will diamond commodity trading have an impact on fine jewellery retail trends?
“It will mean that buyers are more interested in large flawless stones. They will also only want the best and the majority of the value to come from the stone,” says Mr Laib. “If you have an exquisitely crafted piece but with smaller stones, you’re losing a lot of the value in the labour.”
Mr Laib says that the funds could further fuel retail sales of fine jewellery. “You lose a large piece of value by buying at retail, of course [as opposed to investing in diamonds as a commodity at wholesale prices], but the fact that diamonds are seen as assets will make pieces more attractive,” he says. “It creates a feelgood factor about buying pieces.”
Andrew Coxon, president of the De Beers Institute of Diamonds says: “We do, of course, see clients investing these days in rare, beautiful diamonds, but purchasers know that they are also a sound investment.
“It’s as good an investment as art, if you buy for your own pleasure as well as for capital appreciation.”

Thursday, September 6, 2012

Diamonds: treasury gets 9pc of US$456m

Zimbabwe sold diamonds worth about US$456 million by August this year but Treasury only received US$41 million from the proceeds, Finance Minister Tendai Biti has said.
“We are disappointed to note that diamond revenue continues not to reach the treasury. If we look at diamond sales as of the end of August, we had sold Diamonds worth US$456 million,” Biti told NewZimbabwe Thursday after presenting his monthly economic review statement for last month.

“Mbada Diamond Company sold gems worth at least US$200 million and Anjin Investments about US$125 million but nothing was remitted to the Treasury.”
Four companies, all of them joint ventures between the state-owned Zimbabwe Mining Development Corporation (ZMDC) and private investors, are operating at the Chiadzwa diamond fields in the eastern Manicaland province
However, Biti said the country was not benefiting from what officials claim to be one of the world’s richest diamond finds in recent years and called on his Mines counterpart to ensure transparency in the exploitation of the gems.
“So we are pleading with the Mines and Mining Development Minister, Obert Mpofu, to give us the diamond money so that we can be able to pay our struggling government workers,” he said.
“We are also saying Mpofu give us the diamond money so that we give some of it to the Energy and Power Development Ministry for electricity. If we get that money we will also be able to pay school fees for the country’s vulnerable children.”
Biti has since cut his 2012 national budget from US$4 billion to about US$3,4 billion blaming poor revenue inflows from diamond mining where he had expected about US$600 million this year alone.
The Chiadzwa diamonds remain a source of constant friction in the coalition government with Biti and his MDC-T party accusing Zanu PF of deliberately diverting the revenues from Treasury.
However, some of the companies operating in the area said Biti overstated the potential contribution of diamond sales when he put together his 2012 national budget and was now trying to blame them for his mistake.

Wednesday, September 5, 2012

Shear Diamonds puts the brakes on production at Nunavut’s Jericho mine

The Jericho mine in western Nunavut had started to produce diamonds again from stockpiles of rock left at the mine site, shown here. (FILE PHOTO)
The Jericho mine in western Nunavut had started to produce diamonds again from stockpiles of rock left at the mine site, shown here.
A bold plan to revive Nunavut’s Jericho diamond mine, which last operated from 2006 to 2008, has stalled just months after production restarted at the mine.
Shear Diamonds Ltd. said Sept. 4 that it has suspended looking for diamonds in its high-grade stockpiles “as a result of continuing weak world diamond prices,” which have dropped from $232 per carat in September 2011 to $218 this September.
Until prices improve, Shear said it will look at the diamond resources at Jericho’s pit and on other properties located close to Jericho, which lies about 350 kilometres south of Cambridge Bay.
“Having successfully recovered a significant number of carats from the high-grade concentrate stockpiles and having successfully re-established continuing around-the-clock production at Jericho over the last months, Shear has demonstrated that a significant number of diamonds went unrecovered during Jericho’s previous operations,” the news release said.
But world diamond market prices have dropped sharply, it said, bringing prices well below Shear’s break-even prices.
This drop has posed “significant challenges to Shear’s finances.”
In June, Shear and its diamond marketing partner and lender, Taché Company N.V., had decided to continue funding production from the mine’s high-grade stockpiles.
Now Shear and Taché have decided to stop shipments to Taché after mid-September.
“This suspension is in Shear’s long term interest,” the news release said.
Shear now plans to seek other financing or, “alternative transactions to move the project and exploration forward, in order to be in the position to proceed to production when diamond markets recover.”
“While we are gratified that we achieved our 2012 goals, we are subject to many factors that are outside our control, such as current low diamond prices. Prices have dropped significantly just as we were hitting our stride,” said Shear’s president and chief executive officer Julie Lassonde.
“Shear had assembled an outstanding team that has enabled us to overcome many challenges and in achieving our goals, including recently repairing a damaged thickener core well ahead of schedule and on budget. We will now turn to obtaining further financing for exploration.”
In addition to its $2 million term loan, Shear has to date drawn $1.6 million against its $3 million revolving line of credit with Taché.
The first signs of potential trouble at Jericho surfaced Aug. 7.
That’s when the Nunavut Impact Review Board contacted Lassonde asking for outstanding reports, including Shear’s 2010 and 2011 annual report, quarterly reports for 2010 and 2011, a wildlife monitoring and draft wildlife mitigation and monitoring plan and how Shear had addressed “issues of non-compliance” from the NIRB’s 2011 site visit.
The NIRB asked for a response to the list of outstanding reports within 30 days.
Shear bought the mothballed Jericho property from the insolvent remains of the Tahera Diamond Corp. in August 2010.
The Jericho mine, which last operated from 2006 to 2008, was Nunavut’s first diamond mine.
From 2006 to 2008, the mine produced 780,000 carats of diamonds from 1.2 million tonnes of kimberlite mined from its open pit operation.
When Shear bought Jericho, it acquired a recovery plant, maintenance facility, fuel farm, offices, accommodation for 225 staff, an open pit and an estimated three million carats of diamonds underground.
After acquiring the site, Shear announced a plan to extract diamonds from stockpiles of ore that Tahera left behind.

Tuesday, September 4, 2012

RIO Tinto will cut jobs at its Argyle mine

Famed for its rare pink diamonds, as Rio seeks to cut costs in a division the mining giant plans to exit.
The Argyle mine in the remote north of Western Australia began operating in 1983 and is the world's largest supplier of scarce and pricey pink diamonds.
According to the company, it accounts for about one-fifth of the world's natural diamond production.
The decision to cut jobs comes as resources companies across
the country defer or cancel expansion projects and shed jobs in an effort to fight rising operating costs and slumping commodity prices.
Rio already is looking to cut a number of jobs at its coal operations in eastern Australia and has said it will close one mine there before the end of the year rather than find ways to extend its operating life.
"Like others in the industry, Argyle is facing increasing costs," spokesman Bruce Tobin said.

"We cannot do this effectively without reducing employee costs and unfortunately this does mean some roles will no longer be needed."
Mr Tobin declined to say how many employees would be laid off.
Rio is moving operations at Argyle underground from the current open pit in an effort to extend the mine's life to at least 2019.
The Anglo-Australian company in March launched a review of its diamonds business with the aim of selling or separately listing the mines.

Monday, September 3, 2012

Israel diamond industry boosted by lab opening

The Gemological Institute of America (GIA) opened its first laboratory in Israel on Monday, giving a boost to the country's diamond industry, one of its largest export earners.

Israel is a major center in global diamond trade and the sector is a key economic driver. Exports of polished diamonds totaled $3.26 billion in the first half of 2012 and rough diamond exports totaled $1.52 billion.
As in other places, Israel's diamond sector has been hit by the global downturn, with polished diamond exports falling 19 percent from the same period in 2011, and industry leaders welcomed the move by the GIA - which grades and evaluates diamonds - as offering a way for local dealers to cut costs and increase turnover.
"It is not possible for a leading center in the world ... to be without a world leading laboratory," said Moti Ganz, chairman of the Israel Diamond Industry.
Rather than ship diamonds abroad, a time-consuming and expensive process, grading and other services will now be available locally, Ganz said, estimating this would save the industry between $30 million and $50 million a year.

Sunday, September 2, 2012

Diamonds exports dip 42% in four months

Even as the diamond jewellery demand among the American consumers in the US is stable with just three months to go for the Christmas season, all is not well with the Indian diamond industry.
For the first time since the global economic downturn in 2008, the export of polished diamonds has decreased by a staggering 42 per cent at $4.8 billion in the last four months since April-2012 compared to $8.3 billion during the same period in the previous year in 2011.

As per the latest figures published by the Gems and Jewellery Export Promotion Council (GJEPC), the volume of polished diamonds exported by the country has seen a sharp fall of about 95 per cent at 95 million carats in the last four months since April-2012 compared to 200 million carats exported during the same period in previous year.
Industry sources said the dealers and jewellery companies in US, China, Belgium and UAE are grappling with rising diamond inventories and falling prices, as the slack global economy prolongs a year-long slump. It is estimated that about $20-$25 billion worth of polished gems are in the diamond inventories.
Reason: the diamantaires indulged in a large-scale round tripping or circular trading of the polished diamonds by importing and exporting the same goods since 2009. US followed by UAE were the top destinations for round-tripping of goods.
Interestingly, the diamantaires were not in the position to import the polished diamonds in 2012 following the Central government suddenly imposing 2 per cent import duty on polished diamonds in January-2012.
In 2010-11, India exported $28 billion worth of polished diamonds against the import of $20 billion worth of polished diamonds.
"The rough diamond market has experienced softened demand since the beginning of the year. The premier diamond jeweller and luxury retailer - with locations in fashion capitals from New York and Beverly Hills to Paris, Beijing and Hong Kong - estimated that market prices have dipped 8 per cent since April-2012," said a senior executive with GJEPC.
Diamond prices are still struggling to recover since falling off a cliff over a year ago, when the global economic outlook darkened suddenly, spoiling the plans of speculators who had stocked up in anticipation of a stronger economic recovery after the 2008-09 crisis.
Successive waves of the European sovereign debt crisis kept prices low and leery lenders passed higher borrowing costs on to diamantaires, the craftsmen who cut diamonds and who depend on financing for 90 per cent of their rough diamond inventory.