Mar 23

ALROSA Upbeat Despite Sales Decline

RAPAPORT… ALROSA sales fell 6 percent to an estimated $1.25 billion during the first quarter even as its rough diamond prices firmed, the company reported at an investor conference on Wednesday.

The miner’s rough diamond price index rose 2 percent with reports of strong demand at the beginning of the year. The index was flat through 2016.

“ALROSA slightly increased its average diamond price across the mix, so we think the pricing outlook for 2017 now looks stronger,” analysts at VTB Capital wrote after the presentation. “As the market seems to be in good shape, this leaves a more positive price outlook for 2017.”

ALROSA held its third sale last week, after it garnered $365.4 million and $401.9 million respectively in the first two months of the year.

The company sells rough through three channels, conducting 69 percent of its sales through long-term contracts, another 15 percent via spot sales, and the remaining 16 percent by tender in 2016. It currently has 69 clients with long-term contracts.

Although sales slowed during the quarter, the company maintained a positive outlook for the rest of 2017, with full-year production projected to rise 5 percent to 39.2 million carats as the miner ramps up to 40.4 million carats by 2021.

The company expects the rough diamond market to be balanced in the mid-term after the major producers have sold off inventory they accumulated before 2015. ALROSA sold 40 million carats, having recovered 37.4 million carats last year.

Management said it would continue to streamline its operations to focus on diamond mining, easing concerns about the direction the company might take under new chief executive officer (CEO) Sergey Ivanov.

“The company remains committed to divesting non-core assets, with the new CEO putting a special focus on oil and gas assets,” VTB Capital analysts said. “While the divestment of oil and gas assets might get additional impetus under the new management, we reiterate our positive view on ALROSA.”

Shares in ALROSA rose 3 percent in midday trading Thursday on the Moscow Stock Exchange. 

Mar 23

Gold Prices See Seventh Day Of Gains After Terrorist Attack In London

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Mar 22

Dominion, Stornoway in Merger Talks: Report

RAPAPORT… Dominion Diamond Corporation and Stornoway Diamond
Corporation have held discussions over a merger, Reuters reported this week, as
Dominion continued to denigrate a separate takeover offer from the Washington Companies.

The merger talks cover the possibility of Stornoway chief
executive officer Matt Manson (pictured) filling the soon-to-be vacant CEO role at
Dominion, the report said. Discussions started in January, Reuters cited one
source as saying, adding that another said talks were still ongoing.

Dominion and Stornoway both declined to comment on the
report.

A union between the two would combine three significant
mining assets in Canada under one roof, with Stornoway having opened the Renard
mine in Quebec last October. Dominion owns the Ekati deposit in the Northwest
Territories and has a 40-percent stake in the region’s Diavik deposit.

The report came as Dominion confirmed it was prepared to
enter discussions with Washington, a diamond-industry outsider that had approached
the miner with a proposal for a $1.1 billion takeover. On Wednesday, Dominion
said Washington had not made a formal offer, and reaffirmed an earlier
statement from Sunday that the approach was “opportunistic” and undervalued the
company.

Dominion also said Washington had demanded a veto on the
choice of replacement for the miner’s CEO, Brendan Bell, who is set to leave by
June 30. Washington, however, insisted it had only requested that Dominion
avoid appointing a CEO during an exclusivity period, according to a letter it
sent to Dominion chairman Jim Gowans and which the mining company released on
Wednesday.

Letters between Gowans and Washington president Lawrence
Simkins indicate “the aggressive and off-market terms and conditions proposed
by WashCorps [Washington Companies],” Dominion argued.

Mar 22

Gold and Silver Market Morning: Mar 22 2017

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Mar 22

Gold Prices Hit 3-Week High as Trumpflation Fails Ahead of Obamacare Vote, Silver Platinum Lag

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Mar 22

India’s Polished Exports Improve in Feb.

RAPAPORT… India’s polished exports rose 3 percent to $2.41 billion in February, according to data published by the Gem Jewellery Export Promotion Council (GJEPC).

The country, considered a bellwether of global polished diamond production, exported a slightly lower volume of goods, down 1 percent for the month, while the average price of the exports increased 4 percent to $738.53 per carat.
Polished imports dropped 20 percent to $178 million, and net polished exports – the excess of exports over imports – increased 6 percent to $2.24 billion.

Meanwhile, imports of rough diamonds to India declined 3 percent to $1.51 billion during the month, and rough exports grew 11 percent to $145 million, the GJEPC reported. Net rough imports declined 4 percent to $1.36 billion.

India’s February net diamond account, which indicates the country’s diamond trade surplus, grew 25 percent to $875 million, according to Rapaport calculations.

India’s polished exports increased 3 percent to $4.03 billion for the first two months of the year. Rough imports grew 9 percent to $2.77 billion, mirroring the rise in demand reported at the respective De Beers and ALROSA sales during the period.

The country’s net diamond account edged up 1 percent to $1.2 billion over the two-month period.

Mar 22

Shenzhen Bourse to Embrace Polished Diamonds

RAPAPORT…

 The Shenzhen Rough Diamond Exchange (SRDE) plans to expand
into polished trading and is preparing to rename itself to reflect the upgrade.

The bourse is in the process of rebranding as the Shenzhen
Diamond Exchange and has been trialing imports of polished diamonds since late
last year, a spokesperson for the organization told Rapaport News on
Wednesday.

The SRDE opened a bonded warehouse in December 2015, where
rough diamonds and colored gemstones that have been shipped into the southeastern
Chinese city can be held tax-free for traders to view. Through this
arrangement, contractors can cut rough diamonds, and colored stones can enter
the Chinese market following payment of tariffs and value-added tax.

The exchange, home to 20 members, now plans to receive
polished diamonds, which will then be sent to the Shanghai Diamond Exchange as
per import procedures.

Shenzhen is the biggest jewelry hub in China, with around 90
percent of the diamonds the country consumes passing through the city’s traders
or jewelry manufacturers, according to Liu Jianhua, deputy secretary-general of
the diamond division at the Gems Jewelry Trade Association of China. Liu
spoke at a diamond-industry forum in the city last week.

Mar 21

TAGS to Hold Six Dubai Rough Tenders

The collaboration aims to enable suppliers with smaller production to present their goods alongside larger offerings and gain greater exposure. Buyers, meanwhile, will be able to maximize the value of their viewing time, since they’ll have access to a wider range of goods, the groups explained in a joint statement.

“[We] believe that the ability to offer buying opportunities of consistent and regular productions in a convenient and professional environment will benefit both buyers and producers alike,” said Mike Aggett, general manager of TAGS (pictured).

Dubai has developed into a sizable diamond trading center in the last decade, with rough imports of $5.44 billion and exports of $7.55 billion in 2015, according to Kimberley Process data.  

Mar 21

Gold Price Gains, Defies ETF Outflows as Brexit UK Confirms Inflation Jump

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Mar 21

Modi Notes Custom Jewelry Potential

RAPAPORT… India’s gem and jewelry industry must adapt to consumers’ heightened desire for custom-made products in order to grow the sector, the nation’s Prime Minister Narendra Modi told the International Diamond Conference Sunday night.

The trade must understand its clients more deeply in order to mold their consumption habits, rather than take a merely reactive approach, the statesman said in a live video address at the event, which is marking 50 years of the country’s Gem Jewelry Export Promotion Council (GJEPC).

“We live in an era where [clothing] retailers change people’s preferences,” Modi said. “Even hairdressers change hairstyle fashions of their clients. Can’t our jewelers, with their skills, strengths and heritage, create and change global tastes and fashions?”

Modi cautioned that the sector had not made the strides seen in other business areas, even as he recognized its growth from a $28 million industry in 1966 to $40 billion today.

India is lagging, he said, arguing that making stronger connections with consumers was essential to changing that.

With ecommerce making it easier to establish direct contact with consumers, now is a “golden opportunity” for the Indian industry, he declared, recommending that it support young entrepreneurs in cultivating a market for made-to-order Indian jewelry.

Modi also called on the GJEPC and India’s state governments to make this growth happen.

“Today, India has acquired a global brand for high skills and excellence in software,” the Prime Minister added. “We have yet to do that in jewelry. If we do that, the potential is huge. This is a task which the council should take up in right earnest.”

Picture from www.pmindia.gov.in