Mar 19

Live Updates: ‘Mines to Market’ Day 1 Concludes

RAPAPORT… India’s Gem Jewellery Export Promotion Council (GJEPC) is celebrating 50 years by hosting leaders from across the diamond industry. Rapaport News presents live updates from the two-day conference covering mining, manufacturing, marketing and politics.

5:30 a.m. EST: Trade, Miners Clash on Marketing Programs

Marketing of diamonds will only lead to more profits for rough producers and barely help the midstream other than by moving goods down the pipeline more efficiently, argued Rajiv Mehta, CEO of India-based diamond manufacturer Dimexon Diamonds.

“I don’t believe marketing is going to solve our profitability problems,” Mehta said in a panel discussion on mining.

Jim Pounds, executive vice president of Dominion Diamond Corporation, argued that better marketing would have a positive effect on the whole sector, while industry analyst Chaim Even-Zohar said diamond marketers needed to up their game significantly.

“If you see the Swarovski advertising, it’s scary. It’s so clever,” he said. “If you see some of the advertising videos the synthetic diamond producers make, if we were to play that here, everyone would walk out and go and buy synthetics.”

Paul Rowley, executive vice president of global sightholder sales at De Beers, said De Beers had invested in its Forevermark brand in the hope that it would have a positive effect on the image of the whole industry.

“But we realized the industry needed more, which is why the company is investing in the Diamond Producers Association,” Rowley said.

4:30 a.m. EST: Polyakov Downgrades ‘No-Value’ Synthetics

Andrey Polyakov, vice president of ALROSA and president of the World Diamond Council, dismissed the notion that synthetic diamonds held the same value as natural diamonds. The entire value of diamonds comes from their age and history, he argued, adding that synthetics had no geological history.

“Their producers cannot even claim that they are clones of something with worth,” Polyakov said. “Indeed, they are clones of something with no value at all.”

4 a.m. EST: De Beers Exec Urges Focus on Consumer Confidence

Paul Rowley, executive vice president of global sightholder sales at De Beers, highlighted the need to raise consumer confidence by increasing transparency across the diamond pipeline. The industry needs to understand the end consumer and engage in providing information to ensure the industry supplies according to consumers’ exact needs, he asserted.

He defended De Beers against claims that it was squeezing midstream profitability, noting that times were challenging for the entire industry.

3:30 a.m. EST: Analyst to India: Get Profitability Back

Industry analyst Chaim Even-Zohar argued that De Beers production and pricing policy had resulted in tight profit margins among manufacturers and dealers. He told the Indian trade to put “India First” and take a strong negotiation position with miners to restore margins.

“You have enormous power – use it to get profitability back,” he told the audience.

3 a.m. EST: Mining Minister Calls for New Game Plan

Piyush Goyal, India’s minister of power, coal and renewable energy and mines, assured his Zimbabwean counterpart, Walter Chidakwa, that India would work in the coming year to ensure the safety of the people of Africa. India will never think of exploiting Africa, but will work to supplement it, he said.

Goyal also expressed a desire to change the current environment in which miners have concerns about operating in India. “This is an area where India plans to change the rules of the game,” Goyal said. “We’re going to explore the breadth of this country with an honest, transparent bidding process, and the proceeds will go to the poor of this country. We don’t want to say we ran out of diamonds in the 18th century, but that in India, diamonds are forever.”

2:35 a.m. EST: GJEPC Vice-Chair: India’s Trade Must Clean Up Its Act

Russell Mehta, vice chairman of the GJEPC and CEO of Rosy Blue India, pointed to the lack of significant profit margins in the manufacturing sector and cautioned that volatility was the new normal. He also predicted that synthetic diamonds would gain a share of the natural diamond market. Mehta stressed that the industry would have to embrace transparency and align with Indian Prime Minister Narendra Modi’s push toward a cleaner economy, free of corruption.

2:20 a.m. EST: Zimbabwe Urges India to Help Africa

Walter Chidakwa, Zimbabwe’s minister of mines and mining development, stressed that the industry must do more to ensure that Africa benefits from its resources, and appealed to India to support initiatives on the continent. Just as Belgium extended expertise and financial support to India’s trade, India should do the same for Africa’s diamond industry, the minister said.

1:45 a.m. EST: GJEPC’s Pandya Stresses Need for Higher Polished Prices

Praveenshankar Pandya, chairman of the GJEPC, welcomed guests, saying the event would tackle both opportunities and challenges facing the industry, among them marketing, compliance and finance.

He called on Piyush Goyal – India’s mining minister, who also addressed the opening session – to enable the development of India’s two prospective diamond mines. “We want to be able to extract the diamonds we manufacture and export,” Pandya said.

Pandya encouraged the industry to work collectively toward higher polished prices, noting the pressure facing the midstream in recent years.

The banks are wary because prices are not rising, and sometimes there has been excessive supply, leading to high interest rates from banks, he explained. There has to be a realignment, Pandya warned, calling for greater cooperation between the miners and the trade.

Pandya also endorsed the work of the Diamond Producers Association, urging miners to provide it with financial support so it could successfully increase demand. 

Mar 19

Pastor Finds 706ct. Diamond in Sierra Leone

RAPAPORT… An alluvial miner discovered a 706-carat rough diamond at the Koyadu village in Sierra Leone, the government has confirmed.

The stone was presented to the country’s President Ernest Bai Koroma last week by Paramount Chief Paul Saquee of the Tankoro chiefdom in the Kono district, where artisanal miner Pastor Emmanuel A. Momoh unearthed it.

Koroma thanked the chief and his people for not smuggling the diamond out of the country and stressed the importance of selling it in Sierra Leone, according to a government statement.

Doing so “will clearly give the owners what is due them and benefit the country as a whole,” the statement read.

The president gave his assurance that the selling process would be transparent and that the stone would be sold to the highest bidder.

The diamond is believed to be the 13th-largest rough diamond ever found, according to Stellar Diamonds, which operates a mine in Sierra Leone.

Mar 19

Live Updates: Mines to Market Conference Opens

RAPAPORT… India’s Gem Jewellery Export Promotion Council (GJEPC) is celebrating 50 years by hosting leaders from across the diamond industry. Rapaport News presents live updates from the two-day conference covering mining, manufacturing, marketing and politics.

3 a.m. EST: Mining Minister Calls for New Game Plan

Piyush Goyal, India’s minister of power, coal and renewable energy and mines, assured his Zimbabwean counterpart, Walter Chidakwa, that India would work in the coming year to ensure the safety of the people of Africa. India will never think of exploiting Africa, but will work to supplement it, he said.

Goyal also expressed a desire to change the current environment in which miners have concerns about operating in India. “This is an area where India plans to change the rules of the game,” Goyal said. “We’re going to explore the breadth of this country with an honest, transparent bidding process, and the proceeds will go to the poor of this country. We don’t want to say we ran out of diamonds in the 18th century, but that in India, diamonds are forever.”

2:35 a.m. EST: GJEPC Vice-Chair: India’s Trade Must Clean Up Its Act

Russell Mehta, vice chairman of the GJEPC and CEO of Rosy Blue India, pointed to the lack of significant profit margins in the manufacturing sector and cautioned that volatility was the new normal. He also predicted that synthetic diamonds would gain a share of the natural diamond market. Mehta stressed that the industry would have to embrace transparency and align with Indian Prime Minister Narendra Modi’s push toward a cleaner economy, free of corruption.

2:20 a.m. EST: Zimbabwe Urges India to Help Africa

Walter Chidakwa, Zimbabwe’s minister of mines and mining development, stressed that the industry must do more to ensure that Africa benefits from its resources, and appealed to India to support initiatives on the continent. Just as Belgium extended expertise and financial support to India’s trade, India should do the same for Africa’s diamond industry, the minister said.

1:45 a.m. EST: GJEPC’s Pandya Stresses Need for Higher Polished Prices

Praveenshankar Pandya, chairman of the GJEPC, welcomed guests, saying the event would tackle both opportunities and challenges facing the industry, among them marketing, compliance and finance.

He called on Piyush Goyal – India’s mining minister, who also addressed the opening session – to enable the development of India’s two prospective diamond mines. “We want to be able to extract the diamonds we manufacture and export,” Pandya said.

Pandya encouraged the industry to work collectively toward higher polished prices, noting the pressure facing the midstream in recent years.

The banks are wary because prices are not rising, and sometimes there has been excessive supply, leading to high interest rates from banks, he explained. There has to be a realignment, Pandya warned, calling for greater cooperation between the miners and the trade.

Pandya also endorsed the work of the Diamond Producers Association, urging miners to provide it with financial support so it could successfully increase demand. 

Mar 16

Rapaport TradeWire March 16, 2017

Diamond and jewelry stocks were mixed this week, with the
larger conglomerates leading the gains. Shares in Anglo American jumped (+12%) on
news that Indian billionaire Anil Agarwal may buy up to 13% in the De Beers
parent. Signet Jewelers rose (+6.1%) despite disappointing earnings as
management calmed concerns about sexual harassment charges. U.S. department stores were among the bigger
losers for the week with Macy’s declining (-4.6%) on reports of activist investor
Starboard selling its stake in the retail chain.

View the detailed industry stock report

 
Mar 16, 2017 (12:45 GMT)
Mar 9, 2017 (12:44 GMT)
Chng.
 
$1 = Euro
0.93
0.95
-0.02
 
$1 = Rupee
65.39
66.72
-1.33
 
$1 = Israel Shekel
3.63
3.69
-0.06
 
$1 = Rand
12.73
13.24
-0.51
 
$1 = Canadian Dollar
1.33
1.35
-0.02
 
 
 
 
 
 
Precious Metals
 
 
 
Chng.
Gold
$1,231.59
$1,207.45
$24.14
2.0%
Platinum
$965.40
$950.05
$15.35
1.6%
Silver
$17.45
$17.20
$0.25
1.5%
 
 
 
 
 
Stock Indexes
 
 
 
Chng.
BSE
29,585.85
28,929.13
656.72
2.3%
Dow Jones
20,950.10
20,855.73
94.37
0.5%
FTSE
7,405.93
7,277.29
128.64
1.8%
Hang Seng
24,288.28
23,501.56
786.72
3.3%
SP 500
2,385.26
2,362.98
22.28
0.9%


Mar 16

Agarwal to buy $2.5B Stake in Anglo American

RAPAPORT… Shares in Anglo American rose 9 percent on Thursday after Indian billionaire Anil Agarwal announced his intention to invest $2.45 billion (GBP 2 billion) in the mining conglomerate.

The investment would be made through Volcan Investments, Agarwal’s holding company, which owns Vedanta Resources.

Vedanta affirmed its commitment Wednesday to the strategic priorities of ramping up production from its portfolio of low-cost assets, increasing its free cash flow, and reducing its debt.

Anglo American owns 85 percent of diamond mining company De Beers, as well as copper and coal operations, while Vedanta focuses on commodities such as zinc, lead, silver, copper, iron ore and aluminum.

The investment would give Agarwal (pictured) a 10 to 13 percent stake in Anglo, making him the second-largest shareholder, according to Bloomberg.

However, Agarwal said he would not make a takeover bid for Anglo, following the failure of a merger proposal last year, Bloomberg reported.

Mar 16

Gem Diamonds Scraps Bonuses After Weak 2016

 ARAPAPORT… Gem Diamonds’ senior managers missed out on their performance-related
pay last year, as the miner slid to a loss in 2016.

Clifford Elphick, Michael Michael and Glenn
Turner – respectively the company’s chief executive officer, chief financial
officer and legal chief – did not get repeats of the bonuses they received in
2015.

The decision by the rough producer’s remuneration committee came
after revenue fell 24 percent to $189.8 million in 2016 due to a decline in the
number of large diamonds the company managed to extract at its Letšeng mine in
Lesotho.

The group sank to a loss of $144.1 million after one-time expenses –
such as those related to the suspension of its Ghaghoo mine in Botswana – compared
to a profit of $77.6 million a year earlier. Before the deduction of those
expenses, profit stood at $32.4 million, a 39-percent decline.

Gem Diamonds’ rough production from the high-value Letšeng
deposit was marginally lower at 108,206 carats, versus 108,579 a year
earlier, but the number of stones exceeding 100 carats fell to five from 11. As
a result, the average selling price dropped 26 percent to $1,695 per carat. Meanwhile,
the company placed the Ghaghoo mine on care and maintenance due to low prices.

“The lack of large-value diamonds recovered during the year,
coupled with weak diamond prices amid continued poor market conditions,
contributed to disappointing results in 2016,” said Mike Salomon, chairman of
the remunerations committee. “In the context of challenging operating
conditions and the group’s performance in 2016, the executive directors and the
remuneration committee jointly agreed that no bonus should be paid to the
executive directors for 2016.”

While Elphick (pictured) did not receive an annual bonus, his base salary increased to
$566,747 (GBP 464,802) from $550,240 (GBP 451,264) the previous year. The CEO’s bonus in 2015 amounted to $412,381 (GBP
338,203).

The committee also decided not to raise the base salaries of the three executives for 2017, “in light of the current environment,” Salomon said.

“The decline in 2016 in the recovery of diamonds larger than
100 carats has had a disappointing impact upon revenue and cash flow,” Elphick
said about Letšeng. “This recovery rate is consistent with the normal, short-term
variability of the resource.”

Mar 16

Sarine Consolidates Surat Business

RAPAPORT… Sarine Technologies has united all its Surat-based
operations in one building in the Indian diamond-manufacturing city.

The new six-story facility, Sarin House, spans a total of 5,100
square meters and houses about 400 staff members, the Israel-based supplier of diamond-processing
technology said Wednesday.

The building – wholly owned by the company’s Indian
subsidiary, Sarin India – will house customer care and support, along with
services such as the Galaxy inclusion-mapping system, Quazer laser processing,
and the Sarine Profile tool for the polished-diamond wholesale and retail
trade.

“The new structure has been designed and realized to serve
the current and future needs and growth of the group’s operations in India,”
said David Block, Sarine’s chief operating officer (pictured), who is set to become chief
executive officer on May 1.

“In addition to the spacious layout and hi-tech
infrastructure that characterize the new facility, the move to Sarin House is
testimony to Sarine’s commitment to the Indian diamond industry,” he said.

Mar 16

U.S. Polished Imports Steady in January

RAPAPORT…

U.S. polished diamond imports were flat at $1.77 billion in
January, according to government data.

Polished imports by weight slid 8 percent year on year to
840,669 carats, with the average price jumping 8 percent to $2,099 per carat.
Polished diamond exports, meanwhile, slipped 1 percent to $1.25 billion,
meaning net polished imports crept up 1 percent to $517 million.

Rough diamond imports grew almost fourfold to $120 million
from $31 million a year earlier, while rough exports more than tripled to $56
million. Net rough imports
leapt to $64 million from $13 million a year before.

The U.S. net diamond account for January, representing total
imports minus total exports, rose 11 percent to $582 million.

Mar 16

ALROSA Profit Spikes on Diamond Market Recovery

RAPAPORT… ALROSA’s profit quadrupled in 2016 as rough diamond demand improved and the Russian ruble recovered against the dollar.

“They were pretty solid results and in line with our expectations,” said Dmitry Glushakov, an analyst at VTB Capital Research. “There were no real surprises.”

Net profit jumped to $2.3 billion (RUB 133.47 billion) from $554.2 million (RUB 32.2 billion) the previous year, the miner reported Thursday. Revenue grew 41 percent to $5.46 billion (RUB 317.09 billion).

The miner’s bottom line got a boost from a $553.2 million (RUB 32.14 billion) gain on foreign exchange, compared to a loss of $841.1 million (RUB 48.86 billion) the previous year, after the ruble recovered some of its losses against the dollar.

“2016 was a year of active recovery in the diamond market following the decline of 2015,” said Igor Kulichik, ALROSA’s chief financial officer. “The company managed to deliver record-high financial performance and generate net cash flow sufficient to repay short-term and medium-term liabilities and pay out dividends to shareholders.”

ALROSA shares rose 3 percent following the results’ announcement in morning trading on the Moscow Securities Exchange. The shares have fallen 9 percent since the beginning of the year, amid rumors of a management change culminating in Sergey Ivanov being confirmed as the new chief executive officer earlier this week.

Glushakov acknowledged that change of management always represents some risk for the company, but added that previous changes had not impacted ALROSA’s operations.

Analysts were hoping to gain some insight into Ivanov’s plans during ALROSA’s earnings conference call later in the day.

Other market-related risks have gone down since diamond demand gained some momentum in the first quarter, the analyst said. ALROSA’s diamond sales reached $767.3 million in the first two months of the year, with the mining company noting stable demand in most categories of rough diamonds.

ALROSA is planning to raise production 6 percent to 39.2 million carats in 2017, after selling 40.1 million carats in 2016. Group production fell 2 percent to 37.4 million carats last year as it reduced inventory built up during the 2015 market slump.

Mar 15

Gem Diamonds Cancels Bonuses After Weak 2016

RAPAPORT… Gem Diamonds’ senior managers missed out on their performance-related
pay last year, as the miner slid to a loss in 2016.

Clifford Elphick, Michael Michael and Glenn
Turner – respectively the company’s chief executive officer, chief financial
officer and legal chief – did not get repeats of the bonuses they received in
2015.

The decision by the rough producer’s remuneration committee came
after revenue fell 24 percent to $189.8 million in 2016 due to a decline in the
number of large diamonds the company managed to extract at its Letšeng mine in
Lesotho.

The group sank to a loss of $144.1 million after one-time expenses –
such as those related to the suspension of its Ghaghoo mine in Botswana – compared
to a profit of $77.6 million a year earlier. Before the deduction of those
expenses, profit stood at $32.4 million, a 39-percent decline.

Gem Diamonds’ rough production from the high-value Letšeng
deposit was marginally lower at 108,206 carats, versus 108,579 a year
earlier, but the number of stones exceeding 100 carats fell to five from 11. As
a result, the average selling price dropped 26 percent to $1,695 per carat. Meanwhile,
the company placed the Ghaghoo mine on care and maintenance due to low prices.

“The lack of large-value diamonds recovered during the year,
coupled with weak diamond prices amid continued poor market conditions,
contributed to disappointing results in 2016,” said Mike Salomon, chairman of
the remunerations committee. “In the context of challenging operating
conditions and the group’s performance in 2016, the executive directors and the
remuneration committee jointly agreed that no bonus should be paid to the
executive directors for 2016.”

While Elphick (pictured) did not receive an annual bonus, his base salary increased to
$566,747 (GBP 464,802) from $550,240 (GBP 451,264) the previous year. The CEO’s bonus in 2015 amounted to $412,381 (GBP
338,203).

The committee also decided not to raise the base salaries of the three executives for 2017, “in light of the current environment,” Salomon said.

“The decline in 2016 in the recovery of diamonds larger than
100 carats has had a disappointing impact upon revenue and cash flow,” Elphick
said about Letšeng. “This recovery rate is consistent with the normal, short-term
variability of the resource.”