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De Beers proceeds with Sight 3

Publishing Date : 23 March, 2020

Author : REARABILWE RAMAPHANE

“As the situation around the world continues to evolve rapidly, we have been speaking with our customers to understand their requirements. While this is an extraordinary situation, our customers continue to express their desire for the Sight to proceed. We are therefore focused on standing with our customers, meeting their requirements and proceeding with Sight 3.”


This is the most functional paragraph in a De Beers release announcing that Sight 3 will proceed amid coronavirus fears. “The health and safety of our people, our partners and our communities is our overriding focus. Since the start of the COVID-19 outbreak, we have implemented measures as advised by the WHO, national governments and our pandemic response team at our operations and offices,” the statement further reads. The year 2019 was a tough trading year for the global diamond industry, predominantly due to US- China trade war.


The economic uncertainty generated by unstable geopolitical climate arising from the Washington –Beijing tensions led to widespread uncertainty and a global downturn in the diamond industry during the first half of 2019 spilling over to the entire year. These also fostered a heightened sense of caution among the banks that finance the trade, as well as diamond brokers and consumers of luxury goods, leading to significant decline in commerce across all segments.


During the last quarter of 2019, the industry showed signs of slight recovery with holiday season in China and United States thanksgiving opening up the market a bit. Positive sentiment and upward trajectory continued into first sales of the year 2020, with leading producers, Alrosa and De Beers registering an impressive upswing. But that was short lived, thanks to the outbreak of Corona virus in December 2019 which intensified in February this year. De Beers’ second sight fell by about 36 % from the first sales of the year and 25 % when gauged against the same sight in 2019.


This was mainly due to slow business in China where corona virus broke and was more pronounced. After the United States, most of De Beers’ rough diamonds end up in China. Business was also slow in India and Belgium, countries that house some of the world largest centers of diamond cutting and polishing industries. This week reports have also added Israel, another key diamond hub into the list of countries where cutting and polishing firms have closed shop amid COVID 19 global spread.


While that is looking to heavily affect De Beers third sales cycle of the year , travel bans by Government as part of measures  to stop the  spread of Corona into Botswana has directly caused a stir at De Beers Global Sight holders Sales(DBGSS). De Beers Global Sight Holder Sales sells diamonds from all De Beers operations, which are Canada, South Africa and Namibia. Botswana alone through Debswana produces over 2/3 of De Beers Global production.


DBGSS conducts 10 sales sights a year,  where  the world ‘s leading Sightholders from New York-United States, Antwerp- Belgium , Tel Aviv -Israel, Mumbai-India descend into Gaborone to inspect the rough diamonds offered to them, purchase  and ship out to their various cutting and polishing firms in their respective countries. All this countries were on Monday put on travel ban by Government due to their already confirmed cases of corona virus.


According to American business media outlet, Bloomberg, De Beers is currently struggling with how to conduct diamond sales because key customers are blocked from travelling, let alone entre Botswana. The next sight is scheduled to start on the 30th of March. “Our intention remains to hold the sight, in line with the desire for it to go ahead as expressed by customers, but we are developing a suite of contingency plans in the event that it is not possible to hold the sight in the usual manner,” De Beers told Bloomberg this week.


Reports indicate that De Beers will next week hold an emergency meeting with the Government of Botswana with a view to come up with a remedy to the situation, mutual arrangement that would possibly strike equilibrium between health precautionary measures and trying to avoid catastrophic economic shocks from zero diamond trading. “The consistency and predictability of De Beers Group’s rough-diamond products enable customers to have the option to purchase products unseen, and our, our customers continue to express some demand for rough diamonds and have communicated their desire for the sight to proceed,” De Beers officials said.


“We are also looking at how best to meet each customer’s current requirements through other flexibility measures which will be communicated to them in the coming days” added the mining giant this week. Other option reported to be under consideration by the mining behemoth are arrangements such as holding a “blind” sight, where buyers don’t get to look at the goods they’re purchasing. De Beers’ customers could also send local staff to the sale, as many has representatives in either Botswana or South Africa.


Last year De Beers sold about $1.36 billion less worth of rough diamonds. In the year 2018 De Beers’s rough diamonds sales amounted to US$5.39 Billion, approximately P54 Billion, this was a slight pickup from the 2017 sales value of US$5.31 Billion. For the year 2019 the company‘s entire  ten sights only gathered just over $4 billion in  total sales, way below the 2018 value by about $1.35 billion (around P14 billion) mirroring a 25 % decrease.

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