The global diamond sales are likely to stabilise in the second half of the current calendar year due to excessive restocking by both solitaire and jewellery makers in the first half.
With most of the restocking activity completed now, the further growth is dependent on the increase in consumer demand. However, healthy demand signs were seen from emerging markets of Asia, particularly China and India, De Beers which controls over half of the world diamond mining, said in a statement.
Indian solitaire and jewellery markers have built their inventory for the upcoming wedding season and festivals like Dussera, Diwali and Christmas.
During the first half of the current calendar year, De Beers reported 133 per cent increase in production across its operations to 15.4 million carats as compared to 6.6 million carats in the corresponding period of the previous year. This reflects the impact of a production holiday taken in the first half of 2009, and was in response to the increased demand from DTC Sightholders following a better than expected Christmas season as well as steady improvements in market sentiments.
In the first half, Venetia mine produced 2 million carats, Jwaneng mine 5.3 million carats and Orapa mine 4.3 million carats. Debswana’s Cut-8, the major expansion project at Jwaneng mine, has already commenced commercial production. Having successfully refinanced its debt, De Beers Consolidated Mines (DBCM) continues to look at ways to enhance its future prospects.
The increase in the first half sales by 84 per cent to $2.6 billion (versus $1.4 billion in the corresponding half of the previous year) is a result of increased demand from our Sightholders and the market, and reflects an increase in both volume and prices achieved compared to the first half of the last year.
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DTC rough diamond prices are now, on average, have reached the June 2008 pre-recession levels.
For future, however, De Beers will remain largely dependent on emerging markets including India and China, the statement said.
While encouraged by the strengthening demand in the first half, the global economic climate remains fragile especially in the important diamond markets of the US, Japan and the Europe. So, De Beers is looking at the remainder of 2010 with caution and measured optimism.
Fresh investment in diamond mining, meanwhile, fell sharply to a mere $1 million in the first of the current year as compared to $9 million in the same period of the previous year. Investment in mining expansions plunged to nil as against $19 million in the previous year.