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De Beers 1st cycle sales plummet following unfashionable trend

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.

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China’s GDP expands 3% in 2022 despite various pressures

2nd February 2023
China’s Gross Domestic Product (GDP) expanded by 3% year-on-year to 121.02 trillion yuan ($17.93 trillion) in 2022 despite being mired in various growth pressures, according to data from the National Bureau Statistics.

The annual growth rate beat a median economist forecast of 2.8% as polled by Reuters. The country’s fourth-quarter GDP growth of 2.9% also surpassed expectations for a 1.8% increase.

In 2022, the Chinese economy encountered more difficulties and challenges than was expected amid a complex domestic and international situation. However, NBS said economic growth stabilized after various measures were taken to shore up growth.

Industrial output rose 3.6% in 2022 over the previous year, while retail sales slightly shrank by 0.2% data show that fixed-asset investment increased 5.1% over 2021, with a 9.1% hike in manufacturing investment but a 10% fall in property investment.

China created 12.06 million new jobs in urban regions throughout the year, surpassing its annual target of 11 million, and officials have stressed the importance of continuing an employment-first policy in 2023.

Meanwhile, China tourism market is a step closer to robust recovery. Tourism operators are in high spirits because the market saw a good chance of a robust recovery during the Spring Festival holiday amid relaxed COVID-19 travel policies.

On January 27, the last day of the seven-day break, the Ministry of Culture and Tourism published an encouraging performance report of the tourism market. It said that domestic destinations and attractions received 308 million visits, up 23.1% year-on-year. The number is roughly 88.6% of that in 2019, they year before the pandemic hit.

According to the report, tourism-related revenue generated during the seven-day period was about 375.8 billion yuan ($55.41 billion), a year-on-year rise of 30%. The revenue was about 73% of that in 2019, the Ministry said.

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Jewellery manufacturing plant to create over 100 jobs

30th January 2023

The state of the art jewellery manufacturing plant that has been set up by international diamond and cutting company, KGK Diamonds Botswana will create over 100 jobs, of which 89 percent will be localized.

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Investors inject capital into Tsodilo Resources Company

25th January 2023

Local diamond and metal exploration company Tsodilo Resources Limited has negotiated a non-brokered private placement of 2,200, 914 units of the company at a price per unit of 0.20 US Dollars, which will provide gross proceeds to the company in the amount of C$440, 188. 20.

According to a statement from the group, proceeds from the private placement will be used for the betterment of the Xaudum iron formation project in Botswana and general corporate purposes.

The statement says every unit of the company will consist of a common share in the capital of the company and one Common Share purchase warrant of the company.

Each warrant will enable a holder to make a single purchase for the period of 24 months at an amount of $0.20. As per regularity requirements, the group indicates that the common shares and warrants will be subject to a four month plus a day hold period from date of closure.

Tsodilo is exempt from the formal valuation and minority shareholder approval requirements. This is for the reason that the fair market value of the private placement, insofar as it involves the director, is not more than 25% of the company’s market capitalization.

Tsodilo Resources Limited is an international diamond and metals exploration company engaged in the search for economic diamond and metal deposits at its Bosoto Limited and Gcwihaba Resources projects in Botswana.  The company has a 100% stake in Bosoto which holds the BK16 kimberlite project in the Orapa Kimberlite Field (OKF) in Botswana.

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