Global diamond consumption to surge 67%

A surge in rough diamond consumption by the growing middle classes in China and India will push global consumption to $26.1 billion in value, from its 2011 level of $15.6 billion, marking a rise of more than 67 per cent, a report said.

The increase reflects an annual compound growth rate of approximately six per cent per year, added the 2012 Global Diamond Industry Report, released by Bain & Company, a global business consulting firm.
The annual bellwether diamond industry report, conducted in collaboration with the Antwerp World Diamond Centre (AWDC) finds that global demand will outpace supply, signaling solid pricing prospects and a strong positive outlook for the industry overall.
“The fundamental forces point to a bright outlook for the diamond market,” said Yury Spektorov, Bain & Company partner and co-author of the report. “However the global market is becoming increasingly diverse, so successful players will need to understand the changing forces in global wealth distribution, customs and consumer tastes.”
Some of the findings:
The US
•    The US is far and away the world’s largest diamond market. Its $27 billion in revenues are more than three times the revenues of No. 2 market China or No. 3 market India—and twice those of the US mobile phone market
•    Women continue to crave diamonds, but popularity of diamond engagement rings among younger consumers is marginally slowing down. It is unclear whether this is a temporary phenomenon or a long-term trend, but younger women show a growing preference for other luxury goods, especially consumer electronics
•    The 2008–2009 financial crisis hit the U.S. market hard, as diamond jewelry sales fell 18 per cent from 2008 to 2009. The market has rebounded somewhat, but 2012 revenues are only slightly above those of 2000
China
•    China has grown rapidly into the world’s second-largest market for diamonds, with annual sales approaching $9 billion
•    Rising wealth, popular fascination with Western culture and the fast-expanding middle class have powered the market’s growth, with a boost from lower taxes and tariffs
•    Approximately 90 per cent of affluent households (those with annual incomes of $15,000 or more) own at least one piece of diamond jewelry, and most own multiple diamonds
•    Market penetration among lower-income Chinese, who make up half the country’s 1.34 billion population, is much lower, representing a large growth opportunity for diamond retailers. Some 20 per cent of households making less than $15,000 per year own at least one diamond
•    Diamonds have strong emotional and spiritual resonance for Chinese women, who associate them with eternity and high status. The custom of giving diamond engagement rings is catching on quickly in China
•    Chinese women like highly visible diamond jewelry, preferring rings, necklaces and pendants to earrings. Stones of one carat or more are popular, and even mass- and premium mass-market stores in large cities often have several large stones on display
•    Retail expansion plays a key role in promoting diamond availability in all regions, established and emerging, in China
•    The retail scene is highly fragmented, with independent and local chain stores dominating the mass- and premium-mass segments, which account for 95 per cent of annual sales
India
•    Home to the world’s first diamond mines and the center of the cutting and polishing industry, India is the third-largest global diamond market, with annual revenues approaching $ 8.5 billion, and growing rapidly
•    Diamonds are the country’s second fastest-growing discretionary purchase, trailing only mobile phones
•    Many Indians have adopted Western holidays such as Christmas and Valentine’s Day, and diamonds are the most desired gift on such occasions. Diamond engagement rings are also a well-established custom
•    About 90 per cent of India’s affluent women own diamonds, with most receiving their first diamond to celebrate a wedding, engagement, birthday or anniversary
In addition to providing deep dives of the markets in the U.S., China and India, the report also includes a contrast in behaviors and attitudes between the more than 5,000 consumers surveyed by Bain across eight countries:
•    In both emerging and developed markets, diamond jewelry is at or near the top of most women’s lists of preferred presents. In China, India and Russia, diamonds are far and away women’s favourite gift
•    The popularity and penetration of diamond jewelry is high in the U.S., U.K. and Italy, where diamonds make up about half the jewelry market. Penetration and popularity are moderate in most of continental Europe
•    And in China, India and Russia, diamonds have been embraced by the affluent but have scarcely penetrated lower economic groups
•    Chinese women, unlike Indian women, associate diamonds with eternity. For American and Indian women, diamonds carry a strong monetary association as well as a positive emotional charge. Across all markets, diamond rings symbolize engagement, marriage and love
•    Nonetheless, adoption of the diamond engagement ring tradition is uneven. In the U.S. and U.K. about 80 to 85 per cent of engagements are formalized with a diamond, but in Germany the percentage is only 40 per cent
“Many elements of the global diamond consumer experience remain universal,” said Ari Epstein, chief executive officer of the AWDC.
“But the rise of the middle class consumer in the developing markets is having profound impacts on supply and distribution models in the diamond industry.”

Diamond sector fears default on import payments

Many diamond merchants fear a default on payments that may run into hundreds of crores of rupees
 
The falling rupee has taken the sheen off the glittering diamond industry. While gem and jewellery exports have slowed in recent months, the escalating dollar value has put diamantaires in a problem on payments against import of rough diamonds.

From around Rs 52-53 a dollar in April-May, the currency has fallen to Rs 64-65 a dollar now. “Most diamond players had booked rough diamond imports at the exchange rate of Rs 50-52 earlier this year. Traders can’t bear such a huge difference in payments,” said Pravin Nanavati, a former president of the Surat Diamond Association.

In Surat alone, by an industry estimate, a potential default in payment of Rs 700-900 crore looms. Further, exports are not picking up due to the weak economic situation abroad. This has also pushed back realisation from the sales abroad of polished diamonds and jewellery. According to insiders, several diamond trading houses from Surat have failed to make payments to rough diamond merchants in Antwerp.

“Diamond units prefer keeping their inventory ready ahead of the festive season. Therefore, they go for early purchases of rough diamonds. Nobody knew the rupee value will fall so significantly in such a short span. At the current exchange rate, it is almost 10-15 per cent higher cost that we have to bear for our booking made in April,” said a unit owner in Surat.

Trader sources say not much of the bank exposure is involved in this, as most of the funding is through credits from local finance. “Merely 10 per cent is bank loans. Therefore there is less bank exposure but a default will hamper the entire chain, leading to a cascading effect,” said Nanavati.

Rough diamond prices had increased in the first half of the year, while polished diamond prices have not done so. This makes it difficult for diamond processors to pass on the increase in cost due to rupee depreciation.

The industry has high hopes from the coming festival season, including Diwali and Christmas, when sales might pick up.

Call to Value-Add Zim Diamonds

Zimbabwe Diamond Education College has urged organisations dealing with the precious stones to add value to their products before exportation to increase revenue.Speaking at the college's stand at the Harare Agricultural Show yesterday ZDEC's administrative executive Mr Steven Muchenje said diamonds fetch more when they are fully processed. "It is our vision as the first diamond cutting college to impart skills and knowledge to Zimbabweans so that the local diamond industry can rely on local personnel and not foreign assistance.

"The dream to indigenise and create employment cannot be realised unless value-addition knowledge about our natural resources and minerals is imparted to indigenous people," he said. Mr Muchenje reiterated that most Western countries were reluctant to export their expertise to Zimbabwe because their industries and economy were dependent on the supply of raw materials and not processed or finished goods.
ZDEC lecturer Mr Joseph Mutingwendi said the college caters for nine students per class with close supervision from an experienced trainer.
"It is our obligation to provide competitive and entrepreneurship skills to our students in an environment where the lecturer is accessible and flexible to address their challenges.
"We only enrol students that have at least five Ordinary Level passes, but I think in the future we should also adopt an open door policy to enrol students interested in mineral value addition because everyone should benefit from our God-given resources," he said.
ZDEC is at present the only college offering value adding expertise and knowledge for both precious and semi-precious minerals in Zimbabwe. The college offers various training courses such as polishing and cutting (six months), value and grading (3 weeks) and a six-month jewellery course.
ZDEC has state-of-the-art equipment such as lee lapidary, diamond and jewellery machinery used for processing and cutting diamonds and other precious stones.
The Ministry of Education, Arts, Sport and Culture has accredited ZDEC to impart knowledge and know how about value addition of local minerals.
ZDEC's head of cutting and polishing department Mr Nicholas Choto said they entered into an agreement with Lori diamond cutting plant in Armenia to acquire latest technology and expertise about diamond cutting and polishing.

Kennady Intersects 70-Meters of Kimberlite at Kelvin

Kennady Diamonds Inc. intersected more than  70 meters of kimberlite in a step-out drilling exercise  to the northwest of its main Kelvin kimberlite. Delineation drilling, which has been taking place approximately 100 meters from Kelvin Lake, and more than 300 meters from the main Kelvin kimberlite, is increasing confidence in the tonnage potential of the Kelvin kimberlite, according to the junior explorer.
 
Patrick Evans, the CEO of Kennady Diamonds, explained, "We are particularly encouraged that the step-out drilling continues to intersect kimberlite more than 300 meter to the northwest of the main Kelvin kimberlite. This is the farthest to the northwest that kimberlite has been intersected and the kimberlite body continues to demonstrate substantial widths. Delineation drilling to determine the limits of the kimberlite emplacement is continuing."
Kennady Diamonds reported that more than 3 tonnes of kimberlite have been recovered to date from approximately 3,000 meters of drilling, which is well in excess of the targets set for this current program.  At the conclusion of the drill program within the next two weeks, the recovered kimberlite will be dispatched to the Geoanalytical Laboratories Diamond Services at the Saskatchewan Research Council for recovery of diamonds by caustic fusion.
"We expect to release diamond recovery results early in the fourth quarter. The additional data will facilitate progress towards the first resource statement for the Kennady North project and also add significantly to our diamond database," Evans said.

Israel's U.S., International Diamond Week Opens Monday

The U.S. & International Diamond Week is scheduled to open on Monday with approximately 500 buyers from 22 countries expected to attend. Around 365 Israeli companies and 28 U.S.-based suppliers will be exhibiting on the trading floor during the week.

Yair Sahar, president of the Israel Diamond Exchange (IDE), which is hosting the event, noted that companies will have billions of dollars’ worth of polished diamonds on offer, mainly in 1 carat sizes and up. 

Delegations attending the event include from the Diamond Dealers Club of New York (DDC) headed by Reuven Kaufman, president of DDC,  a Far East delegation led by Conroy Cheng Chi-Cheng , a director at Chow Tai Fook Enterprises, as well as high profile delegations from India and Russia  and individual buyers from across the globe.

As part of the program, a number of rough auctions will take place, including by De Beers, ALROSA, Rio Tinto, and I. Hennig-Fusion. In addition, the Rapaport Group will hold its single stone polished auction, and Tzoffey’s 1818 Auction House will hold an exclusive auction of diamonds, colored gemstone and jewelry.

IDE has compiled a full program of events during the four days as presented below.

Separately, IDE and DDC will hold the second annual Israel Diamond Week in New York in November. The event follows the success of the inaugural diamond week that took place one year ago and served as a precursor to the U.S. & International Diamond Week that took place in Israel in April and again this week.

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Blue Nile Customers Regularly Buy $100,000 Diamonds Via Phone App, Says CEO

Blue Nile’s customers are “regularly” buying $100,000 diamonds using their smartphones, the company’s CEO Harvey Kanter said in a recent interview.

While the Seattle-based e-tailer has talked about making big sales via its phone app before, Kanter told Motley Fool they are becoming increasingly common.
“We traditionally, regularly with some degree of—not necessarily a weekly cadence—but cadence, sell $100,000 stones off of iPhones and Androids,” he said. “It’s kind of mesmerizing to me. I would have had [the perspective of], ‘Is that a realistic expectation?’ But the reality is, it is.”
“The younger customer is very, very accessible and, even more importantly, has grown up with the phone, to the point where their phone is actually their PC and they don't go to a normal PC,” he said. “The older folks may still look at the PC as the No. 1 place to go, but younger folks today, and our core customer—who is about 30 years old, buying engagement settings—really goes to a mobile device first.”
He noted the company also sold a $200,000 engagement ring off a tablet.
“People are absolutely shopping on an iPad,” he told Motley Fool.
Kanter noted that 40 percent of his company’s traffic comes from mobile devices, and it expects that share to climb to 50 percent by the end of the year. And while most customers continue to conduct the actual transaction on a PC, he expects that to eventually change, too.
“Our expectation is that as more and more consumers go to mobile devices … as customers [get] more comfortable with actually making the transaction fully on a mobile device,” he said. 

Rupee slide to hit polished diamond production

World's biggest diamond cutting and polishing centre is faced with the possibility of a drastic decrease in its polished diamond production ahead of Diwali. The production is expected to come down by 20 to 25 per cent ahead of the festival.

Diamantaires in the unorganized sector, mainly small and medium unit owners are finding it tough to buy high priced rough diamonds owing to the continuing slide of rupee against the dollar.

President of Surat Diamond Association (SDA) Dinesh Navadia told TOI, "Diamond manufacturers have a responsibility towards their workers to keep the units operating with sufficient output. But the small and medium factories are refusing rough purchase due to the price uptrend and the record fall of the rupee."

Navadia added, "This time around, the rupee downfall has shattered the Diwali hopes of the small and medium diamantaires."

Industry experts said the small and medium diamantaires contribute around 40 per cent of the total polished diamond output pegged at Rs 80,000 crore per annum. Diamond mining companies have been quick to respond to increasing prices and are reluctant to reduce the prices.

In the recently concluded Rapaport International Diamond Conference (IDC), chairman of Rapaport group Martin Rapaport asked the manufacturers to refrain from buying high priced diamonds to cope with the current market situation.

"Miners are raising prices and rough diamond is ahead of the polished one. So why manufacture diamonds when it is so hard to make money?" asked Rapaport.

A DTC sight holder said, "The diamond companies are facing heavy pressure for selling polished diamonds in the domestic market. The diamond consumers are reluctant to pay the high price due to the fall in the rupee against the dollar. This year's diamond jewellery sale on Diwali is likely to remain on the lower side."

EGL Asia to Issue Certificates for Lab Grown Diamonds

The European Gemological Laboratory (EGL) Asia has introduced grading reports and certificates for gem-quality lab grown diamonds. EGL explained the move came in response to rising consumer demand for lab grown diamonds, which are now regularly sold in Asia's jewelry and consumer markets.

Joseph Kuzi, the CEO of the Hong Kong based diamond and gemstone laboratory
reported that EGL Asia already issues certificates for an unnamed supplier of lab grown diamonds.

Additionally, jewelry retailer Chow Tai Fook has been using EGL Asia's services to ensure that all the small diamonds it uses are natural diamonds, according to the lab.

EGL Asia will issue two types of reports for lab grown diamonds namely a Lab Grown Diamond Certificate and a Lab Grown Diamond Mini Certificate. The new identification reports record a diamond's 4C's, measurements and proportions, finish, symmetry, cut grade and fluorescence. The report looks distinctively different from EGL's report for natural diamonds and has a yellow banner at the top.

EGL said that the addition of lab grown reports to its services will provide jewelry retailers and consumers with unambiguous information about the diamonds they are selling and buying.

"Lab grown diamonds are fully legitimate gemstones that are slowly but surely conquering space in retailers' showcases. With these certs, we are not only responding to market demand, but also helping to assure that consumer confidence in jewelry, especially in the Asian luxury product market, which, while already huge, is still young and needs all the help it can get in consumer confidence building in the diamond, gem and jewelry market segment," Kunzi said.

Source:Diamonds.net

BOTSWANA DIAMONDS ENTERS EXPLORATION JV WITH ALROSA IN BOTSWANA

Botswana Diamonds plc has announced that its wholly owned subsidiary, Atlas Minerals (Pty) Ltd (Botswana), has signed an exploration joint-venture agreement with a wholly owned subsidiary of OJSC Alrosa, Sunland Holdings SA (Switzerland), to explore in Botswana. 

The agreement, which requires equal contributions from each party, will utilize and merge Alrosa's exploration technology available to Sunland with the on-ground expertise and extensive diamond database held by Botswana Diamonds.

Applications have been lodged for licenses in the Orapa region.  According to Botswana Diamonds, the first ground has been obtained, and work is expected to commence in the third quarter of this year. The initial budget is $1 million.

"We have already been working together for over 18 months on selecting the best ground in the Orapa and Gope areas of Botswana and we have multiple targets.  More diamond deposits remain to be discovered in Botswana.  The unique technologies being brought to bear on the Kalahari sands improves the chances of success," says John Teeling, Chairman.

Sotheby’s to Auction Rare Diamond in Hong Kong

Asia’s once-rosy prospects look less shiny than they did two years ago, but this has not deterred Sotheby’s from choosing Hong Kong as the place to sell a rare multimillion-dollar diamond in October.
 

The auction house is expected to announce on Monday that the stone, “The Premier Blue,” will be sold on Oct. 7 as part of Sotheby’s regular twice-yearly auction series.

The stone weighs 7.59 carats and is about the size of a shirt button. Its size, vivid blue color and round cut — highly unusual for colored diamonds — make it exceptionally rare, and Sotheby’s expects the stone to bring about $19 million, Quek Chin Yeow, deputy chairman of Sotheby’s in Asia, said in an interview before Monday’s announcement. That, he said, would be a record per-carat price for any diamond.

The choice of Hong Kong as a place to sell the stone underlines just how important Asia has become as a consumer of luxury items, as rapid growth has swelled the ranks of the ultrarich.

“Since about 2006, 2007, Hong Kong has ranked alongside Geneva and New York as a center for jewelry sales,” Mr. Quek said. “It is now the third pillar of the global jewelry market.”

That the rapid growth has slowed has generally not dented the ability and willingness of these superrich to spend. The rich generally remain rich even when times are worse, luxury industry analysts said.

Moreover, Mr. Quek said, Asian buyers tend to be more willing than their Western counterparts to seek out buying opportunities during uncertain times, often making purchases with an eye to potential price increases down the line. And when it comes to diamonds, they tend to like round cuts and colors — another reason for auctioning the Premier Blue in Asia rather than in Europe or the United States.

Sotheby’s is previewing the stone and other auction items around Asia, including in Beijing, Shanghai, Bangkok, Singapore, Jakarta and Taiwan — a reflection of the regional spread of buyers.

About 25 percent to 30 percent of the money spent at the Hong Kong art and jewelry auctions comes from mainland Chinese buyers, but Hong Kong buyers are also very active, as are Singaporeans, Indonesians, Taiwanese and southeast Asians, Mr. Quek said.

12-year-old Apex boy unearths 5-carat diamond

A 12-year-old North Carolina boy on vacation with his family has unearthed a 5.16-carat diamond at Arkansas' Crater of Diamonds State Park.
 
Park officials said Saturday that Michael Dettlaff of Apex, N.C., found the honey brown diamond on July 31 after searching for less than 10 minutes. He named it God's Glory Diamond.
Park officials say the diamond is about the size of a jellybean and is the 328th diamond found this year.
 
Park Interpreter Waymon Cox said, “It is thrilling any time a child finds a diamond here at Crater of Diamonds State Park. Michael was excited to have found his own diamond, as just about any boy would be, but he was absolutely awestruck when he realized its significance.” Cox noted, “The gem is the 27th largest diamond found a park visitor since Arkansas’s diamond site became a state park in 1972. It is the eighth-largest brown diamond that has been certified by park staff.”
Michael found the gem on the north end of the diamond search area near a sign that marks where the 15.33-carat Star of Arkansas, a white diamond that is the third largest diamond to ever come from the site, was found in 1956 when it was a privately-operated tourist attraction.
More than 75,000 diamonds have been found at the site since the first discovery in 1906 by John Huddleston, the farmer who owned the land at the time.
The largest diamond ever discovered in the United States was unearthed at the site in 1924 and weighed 40.23 carats.

World Diamond Mark

The Gem & Jewellery Export Promotion Council (GJEPC) and the Bharat Diamond Bourse have confirmed their support to the implementation of the World Diamond Mark® (WDM) programme, to ensure the health and future growth of the global diamond jewellery sector. Both organisations reaffirmed India's leading role in the industry, by being the first country to actively endorse the WDM programme. The understanding was reached following talks in Mumbai between these leading industry organisations and a delegation of the World Diamond Mark Foundation (WDMF), headed by World Diamond Mark

Foundation Chairman Alex Popov. 

 

"If you want to divert the flow of global spend on luxury, into diamonds, generic promotion through World Diamond Mark is the only answer. The World Diamond Mark will not only unite the players in the diamond pipeline, but also provide a sense of confidence among the consumers that the diamonds they are buying are legitimate. GJEPC will contribute to the WDM programme, subject to appropriate approvals," said GJEPC chairman Vipul Shah.

"The Bharat Diamond Bourse, as the largest diamond exchange in the world, sees support of the World Diamond Mark as a duty of every industry stakeholder. The BDB held a meeting of the WDM team and the BDB board, and we are delighted to be among the first to support this important initiative. It is time for the diamond manufacturing industry to act decisively, and we see the World Diamond Mark as the best solution for the industry's future," said BDB president Anoop Mehta.

"It makes all the sense in the world to begin the implementation of World Diamond Mark® (WDM) programme with the support of the largest player in the world diamond industry - India. We look forward to working with our Indian partners to enhance the position of diamonds in the luxury consumer market, and to ensure the health and growth of the industry we all cherish," said Alex Popov of World Diamond Mark Foundation.

U.S. Polished Diamond Exports Surge to a Record High

U.S. polished diamond imports in June fell 3.6 percent year on year to $1.562 billion, while the average price dropped 4.4 percent to $1,661 per carat. The month of June historically records returns from the JCK Vegas show to major trading centers, and this year polished exports surged 12.6 percent to $2.555 billion, which was a record high.

Of the largest trading centers, Israel recorded the highest amount of returns. U.S. polished diamond imports from Israel were $563.5 million in June, but polished exports were $741.2 million. Polished imports from India were $510.3 million, however, polished exports were $527.7 million. Polished imports from Belgium were $276.5 million and exports were $378.5 million. Additionally, $562.8 million worth of polished diamonds were exported to Hong Kong.
For the month of June the U.S. recorded a polished import deficit of $993 million compared with a deficit of $612 million one year ago.
Rough diamond imports plunged 62.3 percent year on year to $20 million, while rough exports fell 3.6 percent to $27 million, leaving an import deficit of $7 million compared with a surplus of $26 million one year ago. The net diamond account in June, reflecting the value of net imports of polished and rough diamonds, widened to a deficit of $1 billion from a deficit of $586 million in June 2012.
Polished diamond imports for the first half of 2013 have risen 10.7 percent to $11.593 billion, while polished exports have jumped 12.5 percent to $10.113 billion, leaving net imports flat year on year at $1.48 billion. Rough imports contracted  16.9 percent to $212 million and exports have plunged 23.9 percent to $137 million, leaving net imports 2.6 percent lower at $74 million. The net diamond account for the January through June period was nearly flat, or down just 0.6 percent, to $1.554 billion.

Source:Diamonds.net