Two biggest diamond miners barely sold any stones last quarter

The pandemic has devastated the diamond world.
Image: Calvin Sit/Bloomberg

The coronavirus froze up the diamond market so dramatically that the two biggest producers hardly sold any gems at all in the last three months, their combined sales plunging 94% from a year earlier.

De Beers and Russian rival Alrosa PJSC both reported second-quarter sales figures Thursday, at a total of $130 million in rough diamonds between them. A year ago, the two companies sold $2.1 billion.

The pandemic has devastated the diamond world. With jewelry stores closed, cutters and polishers stuck at home and global travel at a standstill, the entire diamond industry essentially came to a halt. That’s piled pressure on the biggest miners who have moved to protect the market by refusing to cut prices.

De Beers and Alrosa have made major concessions to their normal sales rules — allowing customers to renege on contracts and view diamonds in alternative locations. They’ve also reduced production in an effort to control stock levels, but that hasn’t stopped the diamonds piling up, spreading concern in the industry about how the inventories will eventually be wound down.

Still, De Beers, which is owned by Anglo American Plc, is sticking with its plan to produce between 25 million and 27 million carats this year, although the target is “subject to continuous review based on the disruptions related to Covid-19, as well as the timing and scale of the recovery in demand.”

Alrosa said Thursday that its stocks of diamonds now stand at 26.3 million carats, almost equivalent to its full-year production target of between 28 million carats and 31 million carats.

The outlook for the second half remains uncertain, “given the situation with Covid-19 in the US (50% of demand), and in India where the key diamond processing hub Surat has closed again to contain the virus,” Morgan Stanley said in a report Thursday. Alrosa “has previously flagged a Q3 recovery, but we think this could be pushed back.”

© 2020 Bloomberg

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So in Botswana not a singe job has been shed by de Beers. Does this mean they are still going flat out?

This is going to end in tears. There stockpile must be even bigger.

This time they might not be able to bully their way out.

I am no diamond expert by any stretch. My opinion is that a commodity price boom is coming like nothing we have ever seen. Specifically for high value commodities – gold, silver and diamonds etc. Short term as in 6-12 mths a glut for sure maybe less but then off to the races.

Not because of bullish fundamentals, as these will be incredibly bearish – however, we are on the brink of a collapse of confidence in governments globally – it is already happening. Rioting has been triggered by the lock downs, but now globally this is about to become very violent. The full brunt of the lock downs will now start to become evident. Markets will crash again – with an initial final flood into bonds, but as it becomes obvious that governments globally have sold the populace down the river. Sovereign debt will collapse, in Europe it is starting – my opinion on covid, is that it has been hyped for the smoke screen.

As money flees bonds, it will seek out anything tangible – so from iron ore to diamonds – i think De Beers and Alrosa will have an exceptional period ahead as in years, similarly gold miners and commodity producers – we may have missed the boom upto mid 2008 but higher prices are coming now – from massive demand to get out of the EURO and anything related sovereign – of course this will pan out in stock markets as well, as they are private assets.

It might seem like madness to call for booming commodity prices and stock markets in a time when the economies of the world will be the worst they have been in 100 years. Just do not own any government debt. But we will have a flush out first i believe into year end in markets first – then depending on who wins election a different path – but ultimately the same destination.

Governments want/ NEED your wealth and hard won savings and pensions. They will confiscate your cash and freeze your accounts – see Cyprus BAIL INs – long before this happens big money will get out of currency – electronic and cash. A crisis in confidence.

Just a crazy idea – lets see.

End of comments.

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