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The Rough Guide: Who's Buying Where and Why

Insights

Jun 30, 2016 8:00 AM   By Avi Krawitz
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RAPAPORT... There’s an unusual calm about the rough diamond market as both miners and manufacturers appear content with their performance in the first half of the year. Miners are reporting significantly better sales than last year and managed to reduce some inventory built up in 2015, while manufacturers are seeing improved profit from the rough they’re buying.

That’s in stark contrast to a year ago when higher rough prices forced manufacturers to refuse supply, resulting in a slump in sales at De Beers and ALROSA. The lack of profit from rough in 2014 and 2015 prompted many to question the value of long-term supply contracts with the major mining companies.

It seems to be less of an issue today. Rough dealers and manufacturers note they’re getting the best value from De Beers supply as the company has kept prices stable since it reduced in January. While ALROSA has not made any significant price adjustments since August, it’s having no problems selling and posted record results in the first quarter.

Both companies have implied they’ll limit supply and keep prices stable, at least for the next few months while the polished market is uncertain.

That stability and consistency of supply is what attracts manufacturers to prefer long-term contracts over competing for rough from auctions where prices tend to be more volatile and supply is not guaranteed. In fact, the larger manufacturers, which provide polished for jewelry retail programs, argue they could not fill those ongoing polished orders without the guaranteed rough supply the major miners offer.

Therefore, it’s contracted supply that sets the tone for the market. The days of the De Beers “monopoly” may be well behind us, but the market still takes its cues from the [dare I say] London-based company. ALROSA’s influence is on the rise, while Rio Tinto and Dominion Diamond Corp. are also worth noting as they too sell via long-term contracts.

Those top four miners are arguably the only companies with large-enough production to guarantee a scheduled, consistent supply of rough to a set group of clients. Others such as Okavango Diamond Company and Grib Diamonds are said to be considering a shift to contracts, while Petra Diamonds probably has the volume but seems content with its current auction platform.

However, for now, an estimated 60 percent of global supply is sold via long-term contracts among the four majors, while each also sells a smaller portion of their production through auctions. From their client lists, we can recognize which companies are the major buyers of rough on the market.

The four miners recently updated their client websites, which Rapaport News has collated to present this year’s list of who is buying the bulk of global rough supply – and, de facto, producing a major portion of the polished.

The comprehensive list counts 135 companies, up from 127 named last year. While combined production across the four miners is expected to rise by an estimated 6 percent in 2016, and considering they have left over inventory from last year being sold, it makes sense that more diamonds are being spread between a slightly higher number of companies.

The list includes diamond manufacturers and rough dealers, as well as companies with downstream activities that extend into jewelry manufacturing, wholesale and retail.

It also reaffirms a trend among the major jewelry retailers to conduct in-house polished production as they’ve developed rough sourcing and manufacturing capabilities of their own. Signet Jewelers, Tiffany & Co. (Laurelton), Chow Tai Fook, Chow Sang Sang, Luk Fook, Gitanjali Gems, Graff Diamonds (SAFDICO) and Tasaki & Co., are all examples of retailers that appear on this years’ list.

Of the total, 43 companies are headquartered in India (the largest manufacturing center), 41 in Belgium (the major rough trading hub), 14 in Israel, 10 in Russia, nine in the U.S., five in Hong Kong, three in the United Arab Emirates (UAE), two each in Canada, Japan and South Africa, and one each in the UK, Mauritius, Namibia and Switzerland.

De Beers, which sells 90 percent of its production on a schedule of 10 sights a year, has a total of 85 sightholders listed in its sightholder directory for the current contract year that ends on March 31, 2017. Of those, 75 receive rough from its main Global Sightholder Sales (GSS) division. Twenty companies receive beneficiation supply in Botswana, seven in South Africa, nine in Namibia and one in Canada. Four companies have a sight for a supply of industrial diamonds.

In addition, 10 companies have De Beers ‘accredited buyer’ status. That gives them the opportunity to purchase rough from De Beers on an ad-hoc basis depending on the availability of ex-plan – supply offered at a sight that is over and above sightholder applications.

A number of companies have multiple De Beers sights with Diacor International and Julius Klein standing out with four sights each, spanning GSS, Botswana, South Africa and Namibia. A few have contracts from more than one of the major miners with Asian Star, Diarough, Hari Krishna Exports, Laurelton Diamonds and Venus Jewel having penned contracts with all four miners.

Some 57 companies are listed as ‘ALROSA Alliance’ customers, while Rio Tinto has 21 ‘Select Diamantaires,’ and Dominion sells its rough to 32 ‘Preferred Purchasers.’

Ultimately, it will be left to those 135 companies to safeguard the balance in the diamond market. While it has taken some degree of discipline for the mining companies to limit supply, rough sales have still increased compared to last year. De Beers sales rose an estimated 12 percent in the first six months of the year compared with a period in the first half of 2015 when manufacturers were still willing to pay high prices and were fairly aggressive in the rough market.

That scenario became unsustainable in the second half of last year and prices fell about 15 percent as demand plummeted and mining company sales slumped. This year, as polished inventory levels reduced over the holiday period, rough demand has been stimulated once again. But, while polished demand remains sluggish, there has been some concern about over-exuberant rough demand again this year.

It will be up to these 135 contracted rough buyers, along with the mining companies, to ensure long-term stability in the market. After all, their ability to buy rough and sell the resulting polished sets a benchmark for determining the sustainability of the diamond industry. With their supply contracts in check, that’s a responsibility they shouldn’t take lightly.

The following is a list of companies which have supply contracts with De Beers – including Global Sightholder Sales (GSS), beneficiation supply in Botswana, Namibia, South Africa and Canada, its accredited buyers and industrial sightholders – ALROSA, Rio Tinto and Dominion Diamond Corp: 

Company Name Head Office De Beers ALROSA Rio Tinto Dominion
           
A. Dalumi Diamonds Ltd Israel GSS, Botswana      
A.B.T. Diamonds Ltd Israel Accredited Buyer      
A.C. DIAM B.V.B.A. Belgium   ALROSA    
Almod Diamonds Ltd (Duiker Investment) USA Namibia, Accredited Buyer      
Ankit Gems Pvt Ltd India GSS, Namibia      
Arjav Diamonds NV Belgium GSS, Botswana ALROSA    
Arodiam Manufacturing Co NV Belgium GSS, South Africa      
Arslanian Freres Belgium   ALROSA    
Asian Star Co Ltd India GSS ALROSA Rio Tinto Dominion
Aspeco N.V. Belgium   ALROSA    
Bhavani Gems India GSS      
Blue Star Diamonds Pvt Ltd India GSS, Botswana     Dominion
Brilliant Gems NV Belgium   ALROSA    
Brilliant Trading Company (1974) Limited Hong Kong   ALROSA    
Bronner Trading Company Ltd. Belgium   ALROSA    
Choron Diamonds NV Belgium Accredited Buyer      
Chow Sang Sang Jewellery Co. Ltd Hong Kong GSS      
Chow Tai Fook Jewellery Co. Ltd Hong Kong GSS ALROSA Rio Tinto  
Classic Diam BVBA Belgium       Dominion
Comdragmetall of RS(Y) Russia   ALROSA    
Corona Jewellery Company Ltd. Canada       Dominion
Crossworks Manufacturing Ltd Canada Namibia, Canada      
D. Navinchandra Gems BVBA Belgium GSS     Dominion
Dali Diamond Co NV Belgium GSS ALROSA    
DDK Russia   ALROSA    
De Toledo Diamonds Ltd Israel GSS      
Dharmanandan Diamonds Pvt Ltd India GSS ALROSA    
Diacor International Ltd South Africa GSS, Botswana, South Africa, Namibia ALROSA    
Diajewel NV Belgium   ALROSA   Dominion
Diamant Impex Bvba Belgium Accredited Buyer      
Diambel NV Belgium GSS   Rio Tinto  
Diamond India Ltd India   ALROSA    
Diamtrade BVBA Belgium       Dominion
Dianco BVBA Belgium GSS ALROSA Rio Tinto  
Diarough Sourcing SA Belgium GSS ALROSA Rio Tinto Dominion
Diarush DMCC UAE GSS      
Dimexon International Holdings India GSS ALROSA Rio Tinto  
Eloquence Corporation USA Industrial      
EPL Diamond Russia   ALROSA    
Espeka B.V.B.A. Belgium   ALROSA    
Eurostar Diamonds Traders NV Belgium GSS, Botswana      
Exelco NV Belgium GSS, Botswana      
EZ Diamonds Ltd Israel GSS      
Finestar Jewellery & Diamonds Private Ltd India Accredited Buyer      
Fischler Diamonds NV Belgium   ALROSA    
Fruchter Gad Diamonds Ltd Israel GSS      
G.G. Export India       Dominion
Gemmata N.V. Belgium     Rio Tinto  
Gitanjali Gems Ltd India GSS      
Gold Star Diamond Pvt Ltd India GSS      
Gomel PO Kristall OAO Russia   ALROSA    
H Dipak & Co India GSS      
Hard Stone Processing (Pty) Ltd Namibia Namibia      
Hari Darshan Exports Private Ltd India Accredited Buyer      
Hari Krishna Exports Pvt Ltd India GSS ALROSA Rio Tinto Dominion
Hasenfeld-Stein Inc USA GSS      
Henri Polak USA Industrial      
HVK International Pvt Ltd India GSS ALROSA   Dominion
I.D.R.P. BVBA Belgium   ALROSA   Dominion
IDH Diamonds N.V. Belgium     Rio Tinto  
IGC Group NV Belgium GSS, Botswana      
Interjewel Europe NV Belgium       Dominion
Interjewel Pvt. Ltd. India     Rio Tinto  
Jasani Gems Pvt Ltd India GSS ALROSA    
Jewelex India Pvt Ltd India GSS      
Julius Klein Diamonds LLC USA GSS, Botswana, South Africa      
K Girdharlal International Ltd India GSS      
Kapu Gems India     Rio Tinto Dominion
KARP Impex Ltd India GSS ALROSA    
KGK Diamonds (I) Pvt Ltd India GSS, Botswana, South Africa ALROSA Rio Tinto  
Kiran Exports BVBA Belgium     Rio Tinto  
Kiran Gems Pvt Ltd India GSS ALROSA   Dominion
Komal Gems NV Belgium       Dominion
KP Sanghvi & Sons India GSS ALROSA Rio Tinto  
Kristall Production Corporation OAO Russia Accredited Buyer ALROSA    
Kristall-99 Russia   ALROSA    
L&N DIAMONDS LTD Israel   ALROSA Rio Tinto  
L. M. Van Moppes & Sons Ltd UK Industrial      
L.L.D. Diamonds Ltd Israel   ALROSA    
Laurelton Diamonds Inc Belgium GSS, Botswana ALROSA Rio Tinto Dominion
Laxmi Diamond Pvt Ltd India GSS      
Lazare Kaplan International Inc USA Namibia, Accredited Buyer      
Lazyrit-D Russia   ALROSA    
Leo Schachter International Ltd Israel GSS, Botswana ALROSA    
Lieber & Solow Ltd USA Industrial      
Luk Fook Hong Kong GSS      
M. Suresh Company Private Ltd India GSS, Botswana     Dominion
Mahendra Brothers Exports Pvt Ltd India GSS     Dominion
Mohit Diamonds Pvt Ltd India GSS      
Motiganz Diamond Group Israel Botswana, Accredited Buyer      
MUNIC GEMS NV Belgium   ALROSA    
Niru Diamonds Israel (1987) Ltd Israel GSS      
Pluczenik Diamond Company NV Belgium GSS, Botswana, Namibia ALROSA    
Pratham International DMCC India       Dominion
Premier Diamond Alliance LLC USA GSS      
Priti Gems Exports Pvt. Ltd. India     Rio Tinto  
Richold S.A. Switzerland GSS      
Rosy Blue (India) Pvt Ltd India GSS ALROSA    
Rosy Blue NV Belgium GSS ALROSA   Dominion
Ruis Diamonds Russia   ALROSA    
S. Vinodkumar Diamonds Pvt Ltd India GSS      
S.D. Diamond Russia   ALROSA    
S.V. Gems Belgium   ALROSA    
Safdico International Ltd Mauritius GSS, Botswana, South Africa      
Sahar Atid Diamonds Ltd Israel GSS ALROSA   Dominion
Sakha Diamond Japan   ALROSA    
Sauraj Diamonds NV Belgium       Dominion
SBMH Group DMCC UAE GSS      
Schachter and Namdar (Pty) Ltd South Africa Namibia, Accredited Buyer in South Africa      
Shairu Gems Diamonds India GSS      
Sheetal Manufacturing Company India GSS ALROSA Rio Tinto Dominion
Shree Ramkrishna Exports India GSS ALROSA   Dominion
Shrenuj & Co Ltd India GSS, Botswana, South Africa      
Shri Hari Gems India     Rio Tinto  
Signet Direct Diamond Sourcing Ltd USA GSS, Botswana ALROSA Rio Tinto  
Simoni Gems BVBA Belgium       Dominion
Singh Diamonds India       Dominion
Soradiam NV Belgium       Dominion
Star Diamond Group BV Belgium GSS ALROSA    
Star Rays India GSS     Dominion
Suashish Diamonds Ltd India GSS      
SWINTU DIAM BVBA Belgium   ALROSA    
Taché NV Belgium GSS, Botswana, South Africa ALROSA    
TASAKI & Co Ltd Japan GSS      
Trau Bros NV Belgium GSS, Botswana, Namibia ALROSA    
Tunalgy Russia   ALROSA    
V D Global India GSS      
Venus Jewel India GSS ALROSA Rio Tinto Dominion
Vijay Diamond (FZE) UAE GSS      
Vishindas Holaram India GSS     Dominion
Wing Hang Diamond Co Ltd Hong Kong GSS ALROSA    
Yaelstar BVBA Belgium GSS     Dominion
Yerushalmi Bros Diamonds Ltd Israel GSS, Botswana      
Yoshfe Diamonds International Ltd Israel GSS      
Yosi Glick Diamonds (2003) Ltd Israel GSS      

The writer can be contacted at avi@diamonds.net. Follow Avi on Twitter: @AviKrawitz and on LinkedIn.

*Picture courtesy of De Beers.
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Tags: Alrosa, Avi Krawitz, De Beers, diamonds, Dominion, Rapaport News, Rio Tinto
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