Diamond Trading Company (DTC) sightholders convened in London to kick off the 2011 sight year and reflect on a strong 2010. At the DTC reception party hosted by Nicky Oppenheimer, the De Beers Group’s chairman, and Varda Shine, the DTC’s managing director, sightholders were congratulated on a successful year.
“The entire industry should be both proud and encouraged by the resilience of diamonds during the past few years and especially in 2010,” Oppenheimer said, noting that throughout the year, consumers proved their desire for diamonds was still strong.
The DTC’s January sight achieved a value of $650 million, based on RDR estimates, and DTC spokesperson Louise Prior said the overall mood at the event appeared to be very positive. Still, sightholders expect a price increase this February, which would help soften premiums on DTC boxes sold on the secondary market. Sight participants estimated that Indian boxes were selling at premiums of around 12 percent to 14 percent, while larger goods were trading at high-single-digit premiums.
At press time, the DTC was preparing to open the Supplier of Choice (SOC) application process for the forthcoming 2012 to 2015 contract period.
Diamdel Completes Auction Cycle
Diamdel, De Beers distribution unit, reported that its online rough auctions during the fourth quarter of 2010 included 289 lots, with 217 companies participating in the bidding and 89 firms winning lots. During the second half of the year, Diamdel made 532 lots available at auction, 98 percent of which were sold.
Neil Ventura, the chief executive officer (CEO) of Diamdel, said, “In quarter four, we again witnessed a very strong level of demand, with the highest levels of repeat participation from our customers of the year, breaching the previous highs we witnessed in quarter three. This, combined with other indicators, makes us bullish about demand prospects for quarter one of 2011.”
Diamdel made 130 lots of rough diamonds available to bidders from the list of participating Diamond Trading Company (DTC) sightholders, as well as nonsightholders, during the November and December sales cycle in which 127 different businesses participated and 58 different companies won lots. Nonsightholder purchases represented 57 percent of total sales in the fourth quarter as a whole.
In related news, Diamdel Israel opened new offices on the 11th floor of the Yahalom Building in Ramat Gan.
De Beers Sells Finsch Mine to Petra
De Beers Consolidated Mines (DBCM) entered into an agreement with Petra Diamonds to sell the Finsch mine in South Africa for approximately $200 million (ZAR 1.43 billion) in an all-cash transaction.
De Beers will continue to manage Finsch until a number of conditions have been finalized, including the successful transfer of DBCM’s new order mining right to Petra and necessary approvals from the local Competition Tribunal.
Petra Diamonds placed new ordinary shares and raised gross proceeds of about $325 million (GBP 205 million) to acquire Finsch, which will give it access to more than 1 million carats a year and marks its eighth producing diamond mine. Petra already anticipates that production at Finsch will reach over 1.5 million carats in its first year, a total that would more than double the company’s current production of 1.3 million carats.
In related company news, Nicky Oppenheimer, chairman of De Beers, dispelled rumors that he is planning to sell a 40 percent stake in the company and expressed confidence that the company would bring good returns on his investment.
“As things stand at the moment, we are absolutely happy…we think it is a good business and will give us a proper return on that investment,” he told Reuters Africa.
Reports surfaced in December that Anglo American, which holds 45 percent of De Beers, was weighing a bid for Oppenheimer’s stake — after E. Oppenheimer & Son International Limited sold 2.1 million shares in Anglo. However, Oppenheimer told Reuters Africa that reports of his prospective divestment from De Beers came as a complete surprise, but he did not dismiss the possibility of such a deal happening in the future.
Article from the Rapaport Magazine - February 2011. To subscribe click here.