Anglo American flagship diamond miner De Beers recorded a 25 percent plunge in rough diamond sales in first sales cycle of the year 2019 and this shortcoming is due to feeble demand for lower-value diamonds. In a trend which has been going on for three years, the rough diamond sales have been going down since the beginning of the year.
The sales were $505 million (P5.2 billion) in its first sale cycle of the year compare to $672 million(P6.9 billion) last year and $729 million (P7.9 billion) in 2017. This is despite January being one of the strongest month of rough diamonds sales in few years ago as it is believed that is a time when customers are recovering from festive season spending. It appears jewelry lovers are not up to line-up for demand of rough diamonds towards the anticipated diamond exchange period of Valentine’s Day-the day is known for love, red roses, wines and more importantly diamonds.
“Rough diamond sales during the first sales cycle of 2019 were lower than those for the equivalent period last year, reflecting higher than normal sales in the previous cycle (cycle 10 2018) and the slow movement of lower value rough diamonds through the pipeline,” said De Beers CEO Bruce Cleaver. The recent fall in De Beers rough diamond sales is also a far cry compared to the last cycle of 2018 which was the last recorded cycle of the year. During that festive season rough diamond sales were $544 million (P5.6 billion) meaning it decreased by $39 million (P401 million) to the first cycle of 2019.
De Beers which has been having difficulties in sales, forcing it to cut prices, sells the attractive stones in a division of 10 sales cycles a year in Botswana to a select group of customers. According to The Diamond Loupe diamonds are carrying high inventory levels with the rise in rough imports in 2017 and again 2018 following increased rough production rather than rising demand.
“The midstream (traders and manufacturers) is currently swallowing that rough, as polished exports are not increasing at same rate as rough imports, leading to the question of whether the market can continue to digest all the goods entering the market,” says the diamond news website. The Diamond Loupe says there are concerns about consumer confidence falling at the start of 2019.
The website further states that holiday diamond jewelry sales from the major retailers was not exactly robust, and in the US, the Christmas holiday was welcomed by what would become the longest government shutdown in history (35 days), with around 800,000 consumers missing consecutive paychecks.
“Moreover, the reopening the government may be temporary, with a February 15 deadline for a resolution to the issue that triggered it in the first place. Additionally, the interest rate had edged higher and the stock market underwent a massive correction to stock market, making consumers feel less confident about spending.
Chinese jewelers have raised their inventory levels, which mean they will not be looking for diamonds on the market as energetically as usual. Bellwether retailers Chow Tai Fook and Luk Fook both saw a palpable slowdown in same store sales in the past quarter,” says The Diamond Loupe.
These are De Beers sale sights for 2019: Sight 1 21 – 25 January, Sight 2 25 February – 1 March, Sight 3 1 April – 5 April, Sight 4 13 – 17 May, Sight 5 17 – 21 June, Sight 6 22 – 26 July, Sight 7 19 – 23 August, Sight 8 23 – 27 September, Sight 9 4 – 8 November and Sight 10 9 – 13 December.
De Beers is a joint venture between Botswana(15%) and Anglo America (85%). De Beers and its fierce rival Alrosa supply about 70 percent of the worlds’ rough diamonds and these are purchased by authorized manufacturers (called Sightholders if they are clients of De Beers) who then cut and polish the diamonds.
This week Minister of Finance & Economic Development, Dr Thapelo Matsheka approached parliament seeking lawmakers approval of Government’s intention to increase bond program ceiling from the current P15 Billion to P30 billion.
“I stand to request this honorable house to authorize increase in bond issuance program from the current P15 billion to P30 billion,” Dr Matsheka said. He explained that due to the halt in economic growth occasioned by COVID-19 pandemic government had to revisit options for funding the national budget, particularly for the second half of the National Development Plan (NDP) 11.
Botswana Stock Exchange (BSE) has this week revealed a gloomy picture of diamond mining newcomer, Lucara, with its stock devaluated and its entire business affected by the COVID-19 pandemic.
A BSE survey for a period between 1st January to 31st August 2020 — recording the second half of the year, the third quarter of the year and five months of coronavirus in Botswana — shows that the Domestic Company Index (DCI) depreciated by 5.9 percent.
Botswana Diamond PLC, a diamond exploration company trading on both London Stock Exchange Alternative Investment Market (AIM) and Botswana Stock Exchange (BSE) on Monday unlocked value from its shares to raise capital for its ongoing exploration works in Botswana and South Africa.
A statement from the company this week reveals that the placing was with existing and new investors to raise £300,000 via the issue of 50,000,000 new ordinary shares at a placing price of 0.6p per Placing Share.
Each Placing Share, according to Botswana Diamond Executives has one warrant attached with the right to subscribe for one new ordinary share at 0.6p per new ordinary share for a period of two years from, 7th September 2020, being the date of the Placing Warrants issue.
In a statement Chairman of Botswana Diamonds, John Teeling explained that the funds raised will be used to fund ongoing exploration activities during the current year in Botswana and South Africa, and to provide additional working capital for the Company.
The company is currently drilling kimberlite M8 on the Marsfontein licence in South Africa and has generated further kimberlite targets which will be drilled on the adjacent Thorny River concession.
In Botswana, the funds will be focused on commercializing the KX36 project following the recent acquisition of Sekaka Diamonds from Petra Diamonds. This will include finalizing a work programme to upgrade the grades and diamond value of the kimberlite pipe as well as investigating innovative mining options.
Drilling is planned for the adjacent Sunland Minerals property and following further assessment of the comprehensive Sekaka database more drilling targets are likely. “This is a very active and exciting time for Botswana Diamonds. We are drilling the very promising M8 kimberlite at Marsfontein and further drilling is likely on targets identified on the adjacent Thorny River ground,” he said.
The company Board Chair further noted, “We have a number of active projects. The recently acquired KX36 diamond resource in the Kalahari offers great potential. While awaiting final approvals from the Botswana authorities some of the funds raised will be used to detail the works we will do to refine grade, size distribution and value per carat.”
In addition BOD said the Placing Shares will rank pari passu with the Company’s existing ordinary shares. Application will be made for the Placing Shares to be admitted to trading on AIM and it is expected that such admission will become effective on or around 23 September 2020.
Last month Botswana Diamond announced that it has entered into agreement with global miner Petra Diamonds to acquire the latter’s exploration assets in Botswana. Key to these assets, housed under Sekaka Diamonds, 100 % subsidiary of Petra is the KX36 Diamond discovery, a high grade ore Kimberlite pipe located in the CKGR, considered Botswana’s next diamond glory after the magnificent Orapa and prolific Jwaneng Mines.
The acquisition entailed two adjacent Prospecting Licences and a diamond processing plant. Sekaka has been Petra’s exploration vehicle in Botswana for year and holds three Prospecting Licenses in the Central Kalahari Game Reserve (Kalahari) PL169/2019, PL058/2007 and PL224/2007, which includes the high grade KX36 kimberlite pipe.