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Marange Diamond Tender in Antwerp Achieves $11M

Dec 20, 2013 6:21 AM   By Zimbabwe
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Press Release: Over the past week, Antwerp hosted a diamond tender offering rough diamonds from five different diamond-producing companies from the Marange area of Zimbabwe, commissioned by its  government and facilitated by First Element, an independent and specialized service provider. The tender, the first one held in Antwerp since the European Union lifted sanctions against the Zimbabwe Mining Development Corporation (ZMDC), is the result of high-level meetings of Zimbabwean officials and the Antwerp World Diamond Centre in Harare in November. The philosophy of this first trial tender of Marange goods was to enable Zimbabwe and industry stakeholders to make a thorough assessment of the benefits of selling rough diamonds on the open Antwerp market through a trial tender, alongside the regular tenders that are organized in Zimbabwe.

Diamond tendering is one of the industry's main selling channels, similar to the auction principle. A rough diamond tender entails that rough goods are assorted in parcels, in most cases, containing diamonds of various sizes and qualities, ranging from gem- and near-gem-quality, meaning diamonds that are suitable for jewelry manufacturing, up to industrial quality, such as diamond powder used for industrial equipment. Clients are invited, either through a public invitation or on a client-list basis to view the assortments in a specially designed facility that includes separate and discrete viewing rooms, specific security measures and all necessary equipment, such as scales, magnifying equipment, adequate lighting etc. Clients can then view the goods in order to make an adequate assessment of the price they would be willing to pay for the entire (or part of a) parcel. If they decide to make a bid, they can place a bid in a sealed envelope. On the final day, all envelopes are opened, and the highest bid (above the reserve price) wins the tender for a particular parcel/assortment. Preparing rough diamonds for a tender is a matter that requires a great deal of skill and expertise and it involves optimal cleaning, sorting and selecting the composition of each parcel.

The Tender

The goods that were offered in this trial tender included rough diamonds from Marange Resources, Diamond Mining Company (DMC), Anjin Investments, Jinan and Kusena Diamonds, totaling 279,723 carats. Each company offered their own separate assortments using their own assortment procedure, varying widely in quality and size, state of cleaning, sorting and composition of the parcels and classification standards.

The majority of the parcels offered, did not reflect a complete run-of-mine (or production footprint) of each individual mining operation. In other words, the composition of the goods did not represent a cross section of the goods range, from high- to low-quality, produced at any of the five mining operations. Overall, 89 percent of the goods offered consisted of low-quality industrial goods. In general, goods weren't optimally cleaned and sorted and parcels were not ideally composed.

Overall, response to the tender was overwhelmingly positive; 115 clients attended the tender and a large number of those clients were well acquainted with the Marange goods and certain clients even visited more than once over the course of the tender. Compared to an average of 10 to 15 companies that are present at regular tenders in Zimbabwe, it is clear this trial tender was very well received in Antwerp.

In terms of results, it is important to stress that a diamond tender is a business matter that involves a high degree of confidentiality and as a rule, detailed results are not disclosed. However, in accordance with the statements Zimbabwe's Minister of Mines and Mining Development, Walter Chidakwa, made recently, more specifically announcing full transparency on Zimbabwe's mining revenue and selling processes for rough diamonds, it is paramount to disclose as much information as possible on the results of this trial tender.

In total, this trial tender achieved a sales value of $10.7 million, consistent with expectations considering the composition of the individual parcels. In total, this first tender generated $1.6 million for Zimbabwe's treasury, the designated 15 percent royalty fee. Furthermore, it is clear the assortments that actually did (closely) reflect the production footprint or run-of-mine fetched prices that are significantly higher than average sales in Zimbabwe, going up 50 percent compared to average sales in Zimbabwe, demonstrating the high potential of selling goods on Antwerp's open market.

Above all, the trial tender has provided valuable insight and has resulted in tangible guidelines that will allow the government of Zimbabwe to fully optimize a second, larger tender of Marange goods in the near future.  The next sale is scheduled for February 12 to 19, 2014.

Rapaport News is not responsible for, and does not endorse, the content of any third-party press release. This is not a Rapaport Press Release. It has been provided as additional information for our clients.


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Tags: Antwerp, diamonds, Government, Marange, tender, Zimbabwe
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