De Beers loses its shine

The South African diamond dealer reported a significant drop in turnover in its last auction cycle.

Diamonds may be eternal, but their trade is nonetheless subject to the (temporal) vagaries of the economic situation. This is the conclusion that could be drawn from the latest rough stone auctions organized by South African diamond dealer De Beers. In its press release, issued on Tuesday, the firm reported that it sold $415 million worth of diamonds in its fourth sales cycle this year, compared to $554 million in the same cycle last year; a 25% decrease in revenues. This is due to the « macroeconomic uncertainty » and « seasonal slowdown » of De Beers’ largest market: India. The mining company, 85% owned by Anglo American, organizes 10 auctions each year, called « sights », where a select group of international buyers collect their diamonds in Gaborone, Botswana’s capital. Bruce Cleaver, the company’s general manager, nevertheless wanted to be reassuring, explaining that this was »[…] a normal period of seasonal slowdown for the industry, with Indian plants temporarily closing for the traditional holiday period ».
One thing is certain, these results cast doubt on the hopes of a recovery in the world diamond market, as exploitable reserves are becoming increasingly scarce, at ever higher extraction costs, with no real impact on prices, with the rise in synthetic stones pulling prices down. A « worrying » development according to financial analyst Tyler Broda at RBC Capital Markets, for whom « De Beers sells better quality diamonds with an average value higher than that of its peers ».