It is still cold and snowy in Moscow, the capital of the world’s biggest producer of diamonds. The spring doesn’t hurry to come, and one can easily see that nobody is hurrying too. Diamond dealers are nervously smoking awaiting any encouraging news from word diamond industry insiders. In the end of 2011 the industry was stunned and shocked when rough diamonds from Zimbabwe began to intrude the market. It was like an explosion of an atomic bomb with the nuclear winter coming after. Nobody ruled the situation for three long months. Rough prices fell and couldn’t recover.
But the thaw is not far off. The news from the Hong Kong International Jewellery Show in February looked like the first signs of spring. Rapaport wrote that Far East buyers started to purchase diamonds again after an unusually quiet start to the year. There were a lot of exhibitors from India and China with low expectations. But the Show results refuted their assumptions and pessimistic forecasts.
A week after, rough diamond trader Diamdel, a De Beers group company, said that the last rough auction showed good demand despite high prices and tight cutter profit margins. “All our indicators point towards a continued, broad based strengthening in demand in the coming weeks and into the early second quarter,” the Mining Weekly was told by Neil Ventura, the CEO of Diamdel.
The same situation is described by Chairman of the Supervisory Board of ALROSA Ilia Yuzhanov: “It is utopia to expect large volumes of rough diamonds to be thrown on the market... The demand is persistently growing.”
In the mining sector, we saw a suspending of operations at Firestone’s BK11 mine in Botswana until “market challenges have been resolved”, as the company’s CEO Tim Wilkes said to Rapaport. Some decreasing in rough diamond volumes was noticed at the Jwaneng mine owned by Debswana, De Beers Group. Its grand-scale project Cut-8 is going to substantially limit the mine’s output. Nevertheless, it could be assumed that another Debswana’s mine, Orapa will ramp up production.
Zimbabwe held rough diamonds tenders in February with approximately 1.6 million carats being sold. The mining companies working in the Marange area expect to mine up to 20 million carats of diamonds in 2012. But in terms of value, it’s less than a billion US dollars. Not so much to have a strong impact on world prices. ZMDC Chairman Godwills Masimirembwa says: “We are responsible producers. We will not unnecessarily flood the market. We want the people of Zimbabwe to benefit from their diamonds.”
As demand for rough diamonds is climbing up and supply is not to exceed the last year results we can expect a significant rise in rough diamond prices. The only question is when the jump will take place. In summer or earlier?
Rough&Polished
