Demand for diamonds in 2010 increased significantly after weak demand due to the economic collapse hurt the luxury goods sector, Michael Montgomery writes in an article posted on Diamond Investing News. Diamond miners slashed production in 2009, and supply shortages in 2010 helped prices remain high. Last year, average polished prices of certified diamonds rose 10.3 percent during 2010. Prices for rough diamonds rose at a far greater rate, up 26 percent in 2010. Polished trading volumes and prices returned to early 2008 pre-recession levels. The higher prices helped mining firms, who ramped up production over the course of the year. Going forward reports show strong demand for diamonds both in the rough and polished markets, especially in China and India, which is now the world’s leading cutting center.
The DeBeers Group benefited from the increased demand for diamonds and recently reported that sales for 2010 rose 48 percent. “Sales may have climbed to $4.8 billion, while production probably rose 36 percent to 33.5 million carats,” reported Carli Lourens, for Bloomberg. The company also stated that they expect demand in India and China to rise, on average, 20 percent annually to half of the total global demand.
Petra Diamonds Limited (LON: PDL) announced the acquisition of the automated Finsch Mine from DeBeers. The deal worth 1.425 billion rand, is not the first mine that the company has bought from DeBeers. “Finsch is a major diamond producer and this acquisition will serve to immediately more than double our current production, significantly enhance earnings and cashflow and will increase our resource base to over 300 million carats,” stated Johan Dippenaar, CEO of Petra. The company now has eight diamond mines, seven of which are located in South Africa. Since the start of August 2010, Petra’s share price has exploded from 68.25 pence up to 180.00 as of Feb. 2.
Russian diamond mining behemoth Alrosa is hinting about an IPO by the end of 2011. “Russian diamond miner Alrosa could raise up to $2 billion in an initial public offering of a 20 percent stake by the end of the year as part of a large scale government plan to sell off state assets,” stated Fyodor Andreyev, Alrosa CEO. The company will decide to go through with the offering in the coming months, if they decide to go through with the IPO, it most likely will happen by the end of the year.
For Alrosa, 2010 was a tremendous year for sales. The company announced a six fold increase in profits year over year for a total of $372 million. “Revenue from the resale of rough diamonds jumped 51 percent to $199 million… or the entire year it had increased rough production 5 percent to 34.336 million carats,” stated the report on Rapaport.
Dolat Ventures (OTC:DOLV) announced its plans to increase production on their mine in Sierra Leone. Through their subsidiary, “Millennium Mining (SL) announces the successful implementation of new washing plant at its Sewa River location,” stated the press release. The company is expecting to increase production up to 1,000 tons per day, averaging 0.4 carats/ton.
