 "Demand for diamonds would continue to outpace supply: Varda Shine")
India and China would be the primary focus regions for De Beers, owing to strong growth in gross domestic product (GDP) and higher disposable incomes for the average middle class in these regions, Varda Shine, executive vice-president, De Beers Global Sightholder Sales, tells Dilip Kumar Jha. Edited excerpts:
Jewellers feel the fall in gold prices would help diamond jewellery sales.
Diamond prices have been less volatile than gold prices, and diamond jewellery may be a better investment avenue for consumers. In the medium to long term, we believe the demand for diamonds would continue to outpace supply. The outlook for diamonds is positive.
After weak sentiment in the second half of 2012, a revival in sales was seen early this year. Would the revival continue this year?
Did the robust demand have any implications on diamond prices?
Yes. So far this year, prices of both rough and polished diamonds have risen by single-digit percentages. This is purely demand-driven.
Last year, De Beers cut rough diamond output. Would production be cut further this year?
We are dealing with nature and mining is a complex and unpredictable business. We don't precisely know what nature would provide us. Our forecast for this year is equivalent to last year's, if not slightly more.
Coloured gemstones, which are about 80 per cent cheaper, are gaining momentum. Do you think these would give strong competition to diamonds?
The intensifying competition is a healthy sign for consumers. Also, this would give us an opportunity to explore more innovation to sustain competition. Therefore, the strengthening position of coloured gemstones is a positive sign for us.
What about De Beers' plan to set up an auction base in India?
Following the sales agreement with the government of Botswana in 2011, we are now moving a number of our operations from our London office to that in Botswana. This includes our sales functions. By the end of this year, we would run our international sales from our Gaborone office. On the De Beers auction front, which is based on an online auction platform, we have recently set up operations in Dubai. So, we would be able to support our India-based auction customers from there, in addition to supporting our India-based sightholders from our office in Gaborone. In 2007, Diamond Trading Company sales offices were established in Botswana and Namibia. Now, there are a number of Indian sightholders with manufacturing operations in southern Africa.
What are your plans for Forevermark?
We have big plans for widening the Forevermark horizon, in addition to evolving De Beers Auction Sales, an online diamond auction arm of De Beers, to increase sales. Currently, De Beers' auctions account for about 10 per cent of our annual sales.
Jewellers feel the fall in gold prices would help diamond jewellery sales.
Diamond prices have been less volatile than gold prices, and diamond jewellery may be a better investment avenue for consumers. In the medium to long term, we believe the demand for diamonds would continue to outpace supply. The outlook for diamonds is positive.
After weak sentiment in the second half of 2012, a revival in sales was seen early this year. Would the revival continue this year?
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Early 2012 was robust, but it was followed by a weak second half. Diamond sales rebounded early this year, and the trend has been continuing. Based on the indications of an economic recovery in the US and the strong (forecast) of GDP growth in India and China, we anticipate this trend to continue. A positive economic sentiment leaves more disposable income at the hands of the middle class, with jewellery as the first choice.
Did the robust demand have any implications on diamond prices?
Yes. So far this year, prices of both rough and polished diamonds have risen by single-digit percentages. This is purely demand-driven.
Last year, De Beers cut rough diamond output. Would production be cut further this year?
We are dealing with nature and mining is a complex and unpredictable business. We don't precisely know what nature would provide us. Our forecast for this year is equivalent to last year's, if not slightly more.
Coloured gemstones, which are about 80 per cent cheaper, are gaining momentum. Do you think these would give strong competition to diamonds?
The intensifying competition is a healthy sign for consumers. Also, this would give us an opportunity to explore more innovation to sustain competition. Therefore, the strengthening position of coloured gemstones is a positive sign for us.
What about De Beers' plan to set up an auction base in India?
Following the sales agreement with the government of Botswana in 2011, we are now moving a number of our operations from our London office to that in Botswana. This includes our sales functions. By the end of this year, we would run our international sales from our Gaborone office. On the De Beers auction front, which is based on an online auction platform, we have recently set up operations in Dubai. So, we would be able to support our India-based auction customers from there, in addition to supporting our India-based sightholders from our office in Gaborone. In 2007, Diamond Trading Company sales offices were established in Botswana and Namibia. Now, there are a number of Indian sightholders with manufacturing operations in southern Africa.
What are your plans for Forevermark?
We have big plans for widening the Forevermark horizon, in addition to evolving De Beers Auction Sales, an online diamond auction arm of De Beers, to increase sales. Currently, De Beers' auctions account for about 10 per cent of our annual sales.