Angola 3Q 2009 Report

The slump in global commodities prices is likely to have a severe impact on Angola’s mining sector, with producers already beginning to scale back operations in the country. The diamond sector is likely to be the hardest hit, as demand falls and prices drop.

In January 2009, Russian diamond company ALROSA announced that it was unlikely to resume exploration at its Catoca venture in Angola in 2009, due to the impact of the global downturn. However, the company has said that it has no plans to leave Angola. Angola was historically a major producer of diamonds, iron ore, gold and copper before its independence.

However, the ensuing civil war disrupted its infrastructure, significantly slowing the pace of exploitation of its considerable metals and minerals base. Following the end of the 27-year-long conflict in 2002, the Angolan mining industry, along with the economy, has grown rapidly. Angola is globally the fifth-largest producer of diamonds by value, supplying 7-9% of the world diamond output. The country hosts intensive diamond reserves, principally in the provinces of Lunda Norte and Lunda Sul.

The majority of Angola’s diamonds comes from alluvial deposits. However, state-owned mining company Endiama is confident that there could be large-scale deposits in shafts of volcanic rock throughout the country. However, mining in kimberlite is both expensive and technically difficult, meaning that Endiama has had to partner with global companies, such as South Africa’s De Beers and BHP Billiton, who have the necessary expertise. De Beers has invested in a kimberlite concession in northern Angola, while Russia’s ALROSA also has a partnership with Endiama.

Companies that wish to explore for diamonds in Angola have to do so in partnership with state-owned mining firm Endiama, as is stated in Angolan law. Moreover, their ownership in any diamond mine is limited to 40%. According to the latest reports, the company has around 100 mines throughout the country that are ready for exploration. Indeed, some market watchers claim that less than 50% of Angola’s diamond potential is currently being realised. For example, of the 61 concessions currently operating in the country, only around 14 are thought to be producing diamonds.


Industry Forecast

Falling consumer spending power is forcing people to cut back on expensive purchases in the retail market, which is having a negative impact on global diamond sales. Meanwhile, those that are still buying are trading-down to poorer quality and less expensive diamonds. As a result, the majority of diamond producers have started to cut production, with global production forecast to fall from 160mn carats to 120mn in 2009. De Beers, for example, is reported to be decreasing production by as much as 30% over 2009. Meanwhile, banks are cutting back on loans used by diamond traders to purchase the stones in countries such as Angola. As a result, the diamond mining sector in Angola is likely to face a tough year in 2009.

In the longer term, experts still believe there is strong prospective potential for base metals and gold in the country. Indeed, Angola is set to resume mining in the Chipindo region in the next two years. Meanwhile, there are reports of gold reserves being discovered in southern Huíla province. BMI has considered all these factors and the amount of unexplored deposits in the country, and expects the mining sector to reach a value of US$94.78bn by 2013.

Diamond Site Valued at $5.3 Billion

Construction could start next year on a billion-dollar, open-pit diamond mine in east-central Saskatchewan, says a pre-feasibility study prepared for Shore Gold Inc.

The Saskatoon company, which released results of the study Thursday, says data on the Star kimberlite shows probable mineral reserves of 171 million tonnes containing 20 million carats.

The Star kimberlite is part of Shore Gold's 100 per cent-owned Star diamond project and falls within the Fort a la Corne Joint Venture, which is 60 per cent-owned by Shore Gold and 40 per cent-owned by Newmont Mining Corp. of Canada Ltd.

The study, prepared by P&E Mining Consultants Inc., focuses on the Star diamond project and says a mine at the site could produce 20 million carats at a weighted average price of $265 per carat -- totalling $5.3 billion -- in a 12-year mine life.

"Shore is very pleased with the positive results of the Star (pre-feasibility study)," said Kenneth MacNeill, Shore Gold's president and CEO. "These pre-feasibility numbers confirm the potential for a world-class diamond mine in east-central Saskatchewan and provide every reason to move this project into the feasibility stage."

A project timeline included in the study shows the completion of a feasibility study by the end of February 2010, a production decision by March 31, 2010, permitting activities to support a 2010 construction start and commissioning a processing plant within four years after receiving approval for construction.

The study shows Shore Gold can expect a pre-production capital cost of nearly $1.5 billion and a total capital cost of nearly $1.65 billion in the life of the mine, with an initial capital payback period of 5.2 years.

The pre-feasibility study recommends Shore Gold advance the project to a feasibility stage.

The study and reserve estimate "show that Star can be economically developed as a stand-alone diamond mine," said George Read, the company's senior vice-president of exploration and development.

Read added a determination of a resource estimate on the neighbouring Orion South kimberlite within the Fort a la Corne Joint Venture is underway. A resource estimate for Orion South, Read said, has the potential to significantly add to the economics documented in the Star pre-feasibility study.

The study says the development of a mine will bring substantial economic development to the cities of Prince Albert and Melfort as well as other communities in the area. The mine is expected to provide direct employment for about 500 people annually in its 12-year life.

Earlier this month, Shore Gold reported second-quarter losses of $2.2 million, or one cent per share.

The company's shares on the TSX closed Thursday on an upswing, rising seven cents, or 12.28 per cent, to 64 cents.

DTC August 2009 Sight Estimated at $480M

The Diamond Trading Company (DTC) sight number seven was smaller than expected closing with an estimated value of $480 million, RAPAPORT reported. “I think both DTC and sightholders were expecting a larger sight in August because the demand is there,” said one diamond professional. “It seems that De Beers was short on goods as production isn’t yet at full capacity and it takes time to process the new production that is coming through."

De Beers production fell 73 percent to 6.591 million carats in the first half of 2009 as the company temporarily closed its mines in Botswana and Namibia in response to the economic downturn and the associated slump in demand. DTC sales in the first half declined 57 percent to $1.4 billion but have edged up from sight-to-sight as demand has increased throughout the year. Total sales from the first seven sights of the year are estimated at $2.23 billion, down 54 percent from the same period in 2008.

While sightholders said that they expected sight seven to be the biggest of the year as they stock up for the Diwali festival and the Christmas season, many agreed that demand would diminish in the fourth quarter. “Already, demand has gone down because people don’t want to be stuck with excess inventory before the Diwali season,” explained one India-based sightholder.

Another sightholder noted that demand for rough was strong at the August sight, particularly for 3 carats to 4 carats of rough which would be cut into 1 carat of polished. He added that there were shortages in these sizes. DTC spokesperson Louise Prior said there were strong applications for DTC rough at the sight.

Some expressed concern that demand at future sights might be affected by the influx of Russian goods to the market since ALROSA has resumed sales to the market, ending its stockpiling period from the first six months of 2009. In addition, sightholders said they may have to cut back on buying if rough prices continue to rise while polished prices remains relatively stable.

Reports from the sight indicate that DTC raised prices by an average 3 percent to 7 percent, with smaller goods suitable for the Indian market being most affected. Assortments were also reportedly better on certain boxes.

Prior noted that the company’s approach to sight seven was in line with its “dynamic pricing mechanism” whereby there were some minor price adjustments, upwards and downwards.

Still, one sightholder expressed concern that rough prices were being driven by liquidity rather than demand and that DTC needs to help “restore profitability to its clients.” He added that manufacturers need be more responsible in their trading and refrain from “buying rough at any price,” as it appeared that the market was returning to an atmosphere of speculation on future polished price movements.

Sightholders were confident that they were getting good value at DTC even after the price increase. “The DTC goods are expensive but it doesn’t seem that there is a cheaper alternative in the market. The Russian goods are also expensive, as are BHP’s,” said a sightholder. “So there’s a general feeling that rough is too high at the moment.”

ALROSA resumes full-scale production

Russian diamond miner ALROSA will resume full-scale operation of its mining-and-processing integrated plants starting from September 1 after their forced outage due to the sudden economic downturn and after the completion of scheduled repair works, Rough&Polished was told by the company.

Factory No. 12 of the Udachninsky Mining-and-Processing Integrated Works already resumed its operation on August 25, while the Yubileiny Quarry, Factory No. 14 of the Aikhalski GOK, the Internatsionalni Quarry, Factories No. 3 and 5 of the Mirninski GOK, Factory No. 16 of the Nyurbinski GOK will resume their work starting from September 1, 2009.

ALROSA believes that its priority task is to develop production and preserve jobs at the current level of wages. At present the company is implementing a large-scale program of developing underground mines which will permit to preserve its mineral resources base and its positions on the world diamond market in the long term.

On August 21, 2009, the underground Mir Mine was put into operation during an inauguration ceremony attended by Russian Prime Minister Vladimir Putin, President of the Republic of Sakha (Yakutia) Vyacheslav Shtyrov, President of ALROSA Fyodor Andreyev and the diamond mining company’s employees.

Today ALROSA is constructing three underground mines in Yakutia based on the Mir, Aikhal and Udachnaya Mine Fields. It was necessary to build them due to completion or near completion of open-cast diamond mining on these Kimberlite pipes.

The Aikhal Diamond Pipe will reach its design capacity of 500,000 tons of ore per year in 2012. Its second start-up facility is scheduled to be put into operation in December 2009.

The Udachny Mine will be one of the world’s biggest – its total output capacity will reach 4 million tons of ore per year. The construction of this mine started in 2004. In 2001, the fist start-up facility capable to produce 500,000 tons of ore annually will reach its design output capacity.

Over $2.8 billion will be allocated for the construction of these three new mines in the course of ten years (from 2005 to 2014), while their total output capacity will be around six million tons of ore per year.

India Foreign Trade Policy Meets Demands of Gems Exporters

The $27 billion Indian gems and jewelry sector, which had a torrid time recently, has most of its wishes fulfilled in the new trade policy. The sector, which contributes 13 percent to India's total exports, has received a host of incentives, including input duty refunds (under duty drawback scheme) on gold jewelry exports and the setting up of diamond bourses to make the country a larger diamond-trading hub.

"It shall be our endeavour to make India an international diamond-trading hub and we plan to establish diamond bourses in the coming years," commerce minister Anand Sharma said, unveiling the new foreign trade policy.

The $8 billion (Rs 80,000-crore) diamond cutting and polishing industry that has an 80 percent global marketshare has suffered heavily because of the recession in the world's largest diamond markets, the U.S. and Europe. Surat, the diamond city, saw more than 3,000 units shutting with around four lakh workers losing jobs in Gujarat alone.

Sanghavi Exports chairman Chandrakant Sanghavi said: "India is the global hub for diamond cutting and polishing. However, we source rough diamond from Antwerp and supply polished diamonds to New York and Hong Kong. Still, we are nowhere in the diamond-trading business. With bourses being set up, India can create a strong position, where sellers of rough stones and buyers of polished diamonds will have to visit India."

The increase in the personal jewelry carriage limit to $5 million from $2 million would also help the industry promote exports, as it will be able to showcase more jewelry in exhibitions abroad.

"This is a good policy for the sector. Our demand to allow tax refund on gold jewellery export has been accepted. The move will encourage even small players to enter the export market," Vasant Mehta, chairman of the Gem & Jewellery Export Promotion Council (GJEPC) told ET.

The government has allowed the import of diamonds for grading and certification. Mehta believes this will help institutes like the Indian Diamond Institute. Earlier, local companies had to compulsorily buy the precious stones, even for grading. Now, this will become easier.

The industry was, however, disappointed that the interest subvention or the discount on interest rates on loans was not increased to 4 percent from the existing 2 percent.

HRD Antwerp Partners With VIP Trading Limited

HRD Antwerp NV has signed a cooperative agreement with the Belgian headquartered VIP Trading Ltd. – Derain, according to which HRD Antwerp will provide the jewellery chain with co-branded HRD Antwerp Diamond Certificates. In return, VIP Trading Ltd. – Derain will promote actively the HRD Antwerp certificates in its shops. VIP Trading Ltd. – Derain currently operates more than 50 high end luxury jewellery shops in Belgium, China and Macau and is known for its Belgian designed diamond jewelry.

VIP Trading Ltd. – Derain is a subsidiary of Wolfers, a Belgian jeweler with almost 200 years of history and the jeweler for his Belgian Majesty.

To strengthen the bond with and knowledge of Belgian cut diamonds and the Antwerp quality grading system, the retail managers of the group have received an intensive workshop training by HRD Antwerp.

“With this agreement, HRD Antwerp not only supports a jewellery house with its knowledge in diamond certification and high standards of quality, but also tightens the relationship between Antwerp, world diamond centre, and Asia. For HRD Antwerp, this partnerships means a strong commercial backup of its certificate”, states Georges Brys, General Manager of HRD Antwerp.

Major Diamond Jewelry Campaign Set to Kick Off in India

The Gem and Jewellery Export Promotion Council (GJEPC) has initiated a national campaign to promote the domestic gem and jewellery sector and strengthen India's share in the international market, AWDC reports.

The campaign is based on the concept of single line of diamond jewelry and is entitled “Anant” Diamond Jewelry Promotion campaign with Bollywood actress Sonam Kapoor as its brand ambassador.

To date, 26 jewellery manufacturers and more than 150 jewellery retailers in 18 cities in India have signed on to the campaign.

The Anant initiative is being promoted by GJEPC together with Gold Souk India, Rio Tinto, International Gemmological Institute (IGI), and the All India Gem & Jewellery Trade Federation (GJF). It will run from September 19, 2009 to February 14, 2010.

The organisers expect diamond jewellery sales to grow by up to 20 percent during the first year of the campaign.

According to data from the GJEPC, India's export of cut and polished diamonds in July 2009 totaled at some $1.2 billion, compared to $1.3 billion in 2008. Meanwhile, India gold jewelry industry posted a 9% growth in exports in July 2009. Gold jewelry exports in July totaled at $627 million compared to $576 million in July 2008.

De Beers Hires Price Waterhouse Coopers to Help Negotiate Bank Loans

De Beers has hired accounting firm Price Waterhouse Coopers (PWC) to help negotiate a $1.5 billion loan due in March, RAPAPORT reported citing the Times Online. The loan is tied to a consortium of more than 20 banks led by the Royal Bank of Scotland and Lloyds. PWC has prepared a report on De Beers financial outlook for the banks, the Times report stated.

The diamond giant is reportedly in parallel discussions with the banks regarding an additional $1.7 billion loan that is due by 2012. De Beers has an additional $734 million in shareholder loans and $107 million preference shares outstanding, bringing its total debt to just above $4 billion at the time of reporting its interim results for the six months ended June 30, 2009.

The company said at the time that it expects to conclude negotiations to refinance its $1.5 billion loan by the end of the year.

Tiffany’s 2Q 2009 Result, Sales -16%, Profits -26%

Tiffany & Co. reported financial results for its second quarter ended July 31, 2009. Sales and net earnings were below last year but exceeded expectations, and management increased its outlook for the full year accordingly.

Michael J. Kowalski, chairman and chief executive officer, said, "While economic and retail conditions remain challenging, we were encouraged to see many stores achieving either smaller year-over-year rates of sales declines or modest sales growth compared with the past two quarters. More importantly, Tiffany's strong financial and operating position allows us to continue to expand our global presence in pursuit of robust, long-term growth."

Net sales in the second quarter declined 16% to $612.5 million. On a constant-exchange-rate basis, which excludes the effect of translating foreign-currency-denominated sales into U.S. dollars, worldwide net sales declined 14% and comparable store sales declined 16%.

Net sales in the six-month (first half) period ended July 31, 2009 declined 19% to $1,130.1 million. On a constant-exchange-rate basis, net sales and comparable store sales declined 16% and 18%.

In the second quarter, net earnings from continuing operations were $56.7 million, or $0.46 per diluted share, compared with $82.6 million, or $0.64 per diluted share, in the prior year. Net earnings and net earnings per diluted share were $56.8 million and $0.46, versus $80.8 million and $0.63 in the prior year. Net earnings in 2009 include $0.07 per diluted share of non-recurring income related to a loan recovery and tax reserve adjustments.

In the first half, net earnings from continuing operations were $84.2 million, or $0.68 per diluted share, compared with last year's $149.2 million, or $1.16 per diluted share. Net earnings and net earnings per diluted share were $81.1 million and $0.65, versus $145.2 million and $1.13 in the prior year.

Sales trends in August are meeting management's expectation. For the full year (based on assumptions that may or may not prove valid), management now expects a worldwide sales decline of approximately 10%, a decline in the operating margin due to both a lower gross margin and the anticipated sales de-leverage effect on fixed costs, partly offset by savings tied to staff reductions and other cost-related initiatives. Interest and other expenses are believed to net of approximately $50 million.

Diamond Market

Polished markets very quiet as Belgium and Israel reopen after summer vacations.

Indians seeking to buy Russian rough at discount prices amid reports that De Beers has raised prices for smaller rough by as much as 10%, and other rough by 3% to 7%.

Russian rough remains expensive with additional Gokhran state treasury purchases expected as Prime Minister Putin pledges $1.1 billion to support ALROSA.

Gem Diamonds 1H revenues -29% to $118 mil., net profit +154% to $3.3 mil.

Michael Hill Int’l FY09 revenues +9% to $283 mil., net profit triples to $48 mil.

India’s July polished exports -7% to $1.2 bil., rough imports -25% to $848 mil.

Macao 2Q09 retail sales +11%, jewelry sales +22%.

India Introduces Incentives for Industry

India is planning to set up additional diamond bourses to help grow its gem and jewelry exports sector, the federal government said in its trade policy released Thursday. The government has also decided to provide incentives for gold jewelry exports in order to reduce some taxes on the exports.

In order to promote jewelry exports, the government has also extended the time limit for re-import of exported gems and jewelry for exhibitions in the U.S. to 90 days from 60 days previously. The value limit of personal carriage for participation in overseas exhibitions has been increased to $5 million from $2 million. The limit in case of personal carriage, as samples, for export promotion tours has also been increased to $1 million from $100,000.

De Beers Canada Seeking Approval for New Diamond Exploration

De Beers Canada met with representatives of a First Nation tribe to discuss the possibility of starting diamond exploration work on the tribe’s traditional land. Arriving at agreements with the local resident is a necessary step in getting exploration permits, IDEX Online reported.

The August 24 meeting with the Kitchenuhmaykoosib Inninuwug (KI) was “useful and constructive,” according to a release. The sides agreed that the dialogue should continue.

Jim Gowans, president of De Beers Canada, said that his conversation with Chief Donnie Morris “clearly showed that the community is receptive to exploration and development that is undertaken responsibly, and follows meaningful dialogue with the community.”

Midex Gold Corp And Douglas Lake Minerals Inc Pact To Explore Diamonds

Midex Gold Corp has entered into an agreement with Douglas Lake Minerals Inc to develop the Magembe diamond property in Shinyanga Region, The Citizen reported.

Midex said in a statement in Dar es Salaam yesterday that the pact for the 46 square kilometre property became effective this month.

"Under the terms of the agreement, Midex has the right to enter, sample, drill and explore for minerals on the property as defined by the prospecting licence granted by the Government of Tanzania under the Mining Act of 1998," Midex Gold president Morgan Magella noted.

He said Douglas Lake Minerals would have one million shares of Midex.

"To earn 100 per cent interest in the property, Midex's obligation is to commit $2 million in exploration expenditures prior to the second anniversary of the agreement."

The Magembe property is located to the eastern, northern, and western boundaries of the Williamson (Mwadui) Mine, the world's largest diamond pipe and one of Africa's most prolific diamond producers.

The property is part of a 2km buffer zone surrounding Mwadui that was created as part of the original mine development in the 1940s and 50s.

The statement said 41 diamonds and diamond cleavages had been recovered from 12 of the 60 samples gathered during the 2008 exploration programme.

"Because of the past local native mining activity, the recent 80 carat diamond discovery, and our 2008 exploration results, management believes there's considerable potential for a commercially profitable diamond mine," the statement noted

Namdeb Initiates Maintenance Program at Elizabeth Bay Mine

Namdeb has decided to place its Elizabeth Bay mine on a maintenance program as the plant is forecast to experience a $9.8 million (NAD 76 million) loss in 2009. “Namdeb’s Elizabeth Bay plant has been experiencing a number of technical challenges that have affected its ability to operate optimally,” the De Beers subsidiary noted in a statement.

Following a review of the Northern Coastal Management, Namdeb decided to place the Elizabeth Bay tailings processing on a three-shift recovery program through January 2010. It has also initiated a project to complete a pre-feasibility study report by January 2010 on Elizabeth Bay’s operational challenges, followed by a feasibility study and the subsequent implementation of a designed system. “At this early stage, the project construction is expected to run until mid-2011, followed by production ramp-up and final commissioning,” Namdeb said. Plant Maintenance and equipment preservation will be conducted throughout the process.

Namdeb reported that 57 employees have been affected by the decision, which will be redeployed to vacant positions within the company.

Elizabeth Bay is an opencast operation that has undergone three main phases of mining production, the third of which was launched in 1991. Namdeb said the mine “could potentially still provide very good profits for Namdeb in the future.” The company added, however, that it is “essential that we make the right technical and business decisions to still be able to exploit this resource for many years to come.”

India's July Polished Diamond Exports Down 7 Percent

India’s polished diamond exports fell 7 percent to $1.2 billion in July, the Gem & Jewellery Export Promotion Council (GJEPC) reported. By volume, exports rose 12 percent to 4.322 million carats as their average price dropped 17 percent to $286.6 per carat. The country’s polished diamond imports declined 5 percent to $762.9 million and net polished exports, the excess of exports over imports, fell 9 percent to $475.7 million.

GJEPC also reported that rough imports decreased 25 percent to $848.3 million in July, while rough exports dropped 37 percent to $40.7 million. Net rough imports, the excess of imports over exports, fell 25 percent to $807.6 million.

India’s July net diamond account, measuring the extent to which net polished exports exceeded total rough imports, rose 40 percent, but was still at a deficit level of $331.9 million.

During the first seven months of the year, India’s polished exports fell 27 percent to $6.7 billion, with exports down 10 percent by volume to 23.034 million carats. The average price of polished exports for the period fell 19 percent to $292.8 per carat. Polished imports dropped 13 percent to $3.9 billion and net polished exports for January through July decreased 40 percent to $2.9 billion.

Rough imports fell 50 percent to $3.4 billion, while rough exports declined 27 percent to $360.6 million. India’s net rough imports during the seven-month period dropped 52 percent to $3 billion.

India’s net diamond account for the first seven months of 2009 increased 88 percent. However, it was at a deficit level of $183.7 million.

De Beers Raises Rough Diamond Prices

Initial reports from the De Beers Diamond Trading Company (DTC) sight this week indicate that prices were raised as much as 10 percent on some rough assortments. Sightholders noted that smaller rough, particularly smaller rough geared toward the Indian market, was most affected, while prices on other rough increased by between 3 percent and 7 percent.

De Beers did not confirm or deny the report. “We operate a dynamic pricing mechanism and our approach at this sight was no different,” said DTC spokesperson Louise Prior. “There have been some minor price adjustments – upwards and downwards for sight seven and we have had strong applications for our rough diamonds for sight seven.”

Other diamond mining companies have also seen continued price increases at their tenders this month, with BHP Billiton reports hinting at a rise of around 4 percent, while a source at Petra Diamonds said the company is expecting prices at its South Africa tender this week to be about 6 percent higher than in July.

Manufacturers are also reporting that ALROSA’s rough is being brought to the market at equally high levels, dispelling expectations that the Russian supplier may dump stockpiled goods on the market at a discounted rate. Earlier this week, Russian Prime Minister Vladimir Putin pledged $1.1 billion to support ALROSA, indicating that state repository Gokhran is planning to increase its purchases from the company.

Market observers expressed their concern that rough prices have increased consistently since March, while polished prices have remained relatively unchanged. “I think the price increase by De Beers was unnecessary this week and I believe that a disconnect from polished has developed,” said a source in the polished market. “Something has got to give. Either polished has to go up or rough prices have to return to a realistic level.”

Martin Rapaport, chairman of the Rapaport Group, added, “It looks like the mining companies are putting the squeeze on polishers at the worst possible time.”

New Survey: Almost 70 percent Of Retailers Expect Improvement In 2010

According to a new study published by KPMG, the retail industry’s outlook for 2010 is sunny. The study indicates that the majority of retail executives believe that 2010 will be a better year in terms of both profitability and job placement.

70% of industry executives expect business to improve next year. Two-thirds (68%) predicted stronger revenue and greater profitability (66%).

When asked, 84% of the executives stated that they expect the retail job market to improve and 32% are convinced that conditions will be better than in 2009. More than half of the executives polled said they are confident that stability is on the way. Only 14% reported possible further headcount reductions.

Mark Larson, KPMG global retail sector chairman, stated: "The KPMG survey findings reflected an expression of guarded optimism among retail executives, given the industry's challenges as demand for goods continued to plummet during the recession. Their optimism is in sharp contrast even with the latest report from the Commerce Department, which revealed last week that retail sales dropped in July, despite evidence that the economy has stopped contracting and that economists were forecasting a gain in sales."

54% of the retailers noted that they plan to focus primarily on growth investment strategies, but almost half are still intent on cutting costs. Respondents noted that the greatest challenges for these businesses will be restoring consumer confidence levels (55%), securing new revenue sources (51%), cost management (48%) and changes in consumer demand (46%).

Jewelers Of America Parners Up With Ideal Diamond Solutions To Promote Jewelry Retailers

The national trade association for fine Jewelry retailers, Jewelers of America, has signed a partnership agreement with Ideal Diamond Solutions, a company that provides online services for independent jewelers, the company announced Tuesday. Ideal Diamond Solutions will provide Jewelers of America jewelry retailers with a variety virtual tools for promoting their jewelry online.

The services that Ideal Diamond Solutions will provide to Jewelers of America jewelry retailers include a diamond database of some 150,000 diamonds, a “build your own ring” tool, a diamond search engine on their websites, and many other attractive features. Jewelers of America retailers will be able include content from Jewelry Information Center, the consumer marketing arm of Jewelers of America.

Diamond explorer BRC DiamondCore Reports Loss During 2nd Quarter 2Q 2009

Diamond exploration company BRC DiamondCore Ltd. has reported a net loss of $2.06 million for the second quarter of 2009, resulting in an accumulative loss of $3.54 million for the first half of the year, Antwerpfacetsonline reported.

According to a company statement, its expenses for the second quarter included the costs associated with the retrenchment of employees, which now have all been accounted for. The company added that even though it has placed its operations on a care and maintenance basis, as a result of the global financial crisis, there are still significant costs such as surface use rentals payable to the land owners, electricity, security and fuel. Depreciation also continues even though the assets are not in use.

BRC DiamondCore focuses most of its efforts on the prospective Tshikapa project in the Democratic Republic of the Congo, as well as on projects in South Africa. The company has a broad spectrum of projects ranging from advanced stage trial mining operations through grass-roots exploration.

Alrosa posted a 14.7 billion rouble net loss in 1H 2009 by RAS

Russian diamond miner Alrosa posted a net loss worth 14.675 billion roubles in the first six months of 2009 by the Russian Accounting Standards (RAS) versus 3.43 billion roubles of profit compared to one year ago, the company’s statement says.

“The loss in the first half of this year was stipulated by the situation in the world diamond market," the company’s representative explained."ALROSA did not sell anything during this period and returned to the market only last July. However, the company preserved its level of output and continued the construction of underground mines. So the loss was the result of these factors.”

It is noteworthy that ALROSA’s net loss in the first quarter of 2009 reached about 13 billion roubles (as against 112.57 million roubles of profit in the first quarter of 2008). Thus, in the second quarter the company managed to reduce its loss in a considerable way.

During the six months ALROSA gained 13.412 billion roubles of sale proceeds, a decrease by 2.4 times compared with the first half of the past year. The company’s plan for sale proceeds – 27.99 billion roubles – was fulfilled by 47.9%. Rough sales were down 79.6% compared with the first six months last year, while polished sales slumped 82.8%.

The cost of goods sold was 11.584 billion roubles as against 16.69 billion roubles in January-June last year.

The company’s accounts payable reached 155.2 billion roubles as of June 30, 2009 including 63.642 billion roubles worth of payables due in less than one year.

ALROSA was agile in attracting loans to finance its program of constructing underground mines (there are three mines currently under construction and worth about one billion dollars each) in the absence of cash proceeds from sales. As reported, ALROSA’s net debt in the end of 2008 amounted to 115.545 billion roubles. It means that the company managed to boost its debit by another 34%.

At the same time, starting from last July ALROSA stopped to increase its indebtedness and began to reduce it. “The company has used its own funds to pay back the first part of its bank credit worth 2.8 billion roubles to Alfa-Bank. Besides, it has come to agreement with this bank on how to re-structure the remaining part of the debt,” ALROSA’s spokesman said. The company started to re-pay the debt due to its resumed sales on the market. According to reports, last July ALROSA sold $150 worth of rough on the market, the major part of it bought under long-term contracts. The company’s spokesman said that from the beginning of last July ALROSA has already earned about $66 million from rough and polished sales.

Rough sales to the government may become another source to settle the company’s debts. Earlier ALROSA informed it was holding negotiations with Gokhran for additional sales of rough diamonds worth 1.5 billion to the Russian State Repository during this year and for an equivalent amount in 2010.

It was also reported that in 2009 the Russian government already bought 12 billion roubles worth of rough diamonds from ALROSA. This amount included the 3.69 billion roubles annually earmarked for purchasing by Gokhran in the period of 2008-2010. ALROSA shipped this amount of rough to Gokhran in early 2009. Around 8.4 billion rubles were allocated for additional purchasing (7.1 billion roubles for rough diamonds and 1.3 billion roubles for VAT payments). This stock was sold by ALROSA to Gokhran last June.

Besides, the company may reduce its liabilities by selling its non-core assets. A market source informed that ALROSA’s hydrocarbon assets deal involving their sale to VTB for $620 million was nearly completed and the company was waiting for money transfer. The source did not specify the oil and gas assets in question, however previously ALROSA held negotiations to sell OOO Urengoyskaya Gazovaya Compania and ZAO Geotransgaz. The company also owns two hydrocarbon assets in Yakutia: ZAO Irelyakhneft and a controlling stake in OAO Sakhaneftegaz, which was subject to judicial supervision since late last year.

Projects In Africa Face Alrosa Internal Review

Russian Miner Alrosa does not plan investing in projects on the African continent until the economy radically improves, a source at the corporation told Prime-Tass economic news agency.

He indicated that ALROSA's new president is doing a review of all the African projects and that is why the corporation is not considering any new project in African countries. Earlier, Jornal de Angola newspaper quoted ALROSA's representative Alexei Chigidov as saying the corporation planned investing about $500 million in Angola's social sphere. According to the newspaper, Chigidov said the money would be used to build housing, schools, and dams.

ALROSA is majority owned by Russia's Federal Agency for Property Relations. Another 32 percent belongs to the government of the constituent region of Yakutia, and 8 percent, to Yakutian districts. The corporation's stakes are also owned by other corporate and individual holders.

(c) 2009 Itar-Tass. All Rights Reserved.

Thailand Cabinet Approves Tax Break for Rough Imports

Thailand's Cabinet has approved the waiver of the value added tax of 7 percent for imports of rough diamonds, gems, and raw materials used by the jewelry industry.

The Revenue Department stated that the Royal Decree will be issued shortly to enforce the waiver, which will be in effect until the end of 2011. However, the withholding tax of 1 percent will remain unchanged.

(c) 2009 Thai News Service, Source: The Financial Times Limited

Rio Tinto Diamond Revenues Fell 68% in First Half

Rio Tinto reported Thursday that revenues from its diamond operations fell 68 percent to $184 million in the six months that ended June 30, 2009. The company noted that the prices and sales volumes of its diamonds were severely impacted by the economic downturn. “The effect on the rough diamonds market has been exacerbated by the lowering of inventory levels in the diamond pipeline, resulting from reduced global liquidity,” Rio Tinto explained.

As a result, the diamond unit posted a net loss of $56 million, compared with profits of $108 million one year ago. Earnings before interest, tax, depreciation and amortization (EBITDA) fell to negative $6 million from $239 million in 2008.

Production across the company’s three diamond operations fell 14 percent to 6.787 million carats during the half year. Rio Tinto has full ownership of the Argyle mine in Australia, a 60 percent stake in the Diavik mine in Canada and 77.8 percent of the Murowa mine in Zimbabwe. It did not provide separate data for each mine in the half-year report.

Rio Tinto cut its capital expenditure on diamond assets by 57 percent to $157 million during the period. The assets were valued at $1.55 billion on June 30, compared with $1.34 billion at the start of the period.

Rio Tinto’s full group net earnings fell 65 percent to $2.5 billion, with revenues down 35 percent to $19.5 billion. Group chairman Jan du Plessis stressed that Rio Tinto remains cautious about the recent rally in commodity prices. “The expectation that development in emerging markets will generate underlying strength in metals and minerals demand over the long term remains broadly unchanged,” he added.

Delegation from Rio Tinto visits India

A delegation of executives from Rio Tinto Diamonds, led by managing director Bruce Cox is visiting India, to plan for future diamond supplies and distribution. The delegation visited diamond cutting and polishing centres in Surat and Bhavnagar, and interacted with leading manufacturers who cut and polish diamonds from its Argyle diamond mine.

India is known to be the major cutting and polishing centre for Argyle mine diamonds. Discussions centred around the future plans for the Argyle mine, shift to underground mining and the longer life achieved for the mine until 2018 at the minimum. The delegation believes that the interactions will help it better the distribution through the pipeline and culminate into growth.

New Law Sets Limits for Lead Content in Children's Jewelry

The Consumer Product Safety Improvement Act (CPSIA) of 2008 set new federal lead limits for products intended for children 12 and under, including jewelry. According to a new law, on August 14, 2009, the lead limit for jewelry dropped from 600 parts per million (ppm), or 0.06 percent, to 300 ppm. Regarding paint or a similar surface coating on children's jewelry, the lead limit decreased from 600 ppm to 90 ppm.

The CPSC is currently determining whether to permanently exempt children's precious metal jewelry (karat gold, sterling silver, and platinum group metals), as well as gemstones from the law’s testing and certification requirements. This action is strongly advocated by the MJSA. Makers and importers of precious children’s jewelry are now temporarily exempt from the law's testing and certification requirements. Makers and importers of children's base-metal jewelry are not exempt from the new law and must conform to its requirements.

Actions to Take if You Are Not Exempt from the Law

The CPSIA mandates that jewelry manufacturers and importers conduct third-party lead content testing of their children's jewelry, through labs accredited by the Consumer Product Safety Commission, (CPSC). A listing of certified labs is available on the CPSC website. MJSA members get special member discount rates with ESS, a division of Thielsch Engineering in Cranston, Rhode Island.

The CPSIA requires a certificate to accompany your shipments of children's jewelry, in paper or electronic form, showing that testing was conducted. The CPSC has created a PDF of the facts that must be included on the certificate, instructions for completing it, and a list of FAQs. Click here to access it.

The CPSIA calls for permanent tracking labels so that a product can be traced back to its source. The CPSC recently ruled that when items are too small to be permanently marked (such as jewelry) the required tracking information can be included on the product packaging instead. The CPSC issued a policy statement on July 20, 2009, that details what's required on the labels. Click here for more information.

If your testing turns up lead content over federal limits, there are lead-free alloys available. NOTE: These alloys can typically have up to a 25% higher cost than leaded alloys-and can produce rougher castings that require more finishing. For help with quality assurance and lead contamination problems, MJSA has a quality control program for members with several highly qualified experts in jewelry production available at discounted rates. Click here for more information.

Ernst & Young's Mining Index Surges By 47% in Q2

Advisory services firm Ernst & Young has reported that its index of the biggest 20 mining firms on London's Alternative Investment Market (Aim) soared by 47% during this year’s second quarter. The rise is attributed to a recovery in base metal prices.

Nevertheless, Ernst & Young stated cautiously: "Confidence in the junior mining sector on Aim appears to be making a return, but uncertainty remains the prevailing factor. The economic and market conditions continue to stress the have/have-not cash divide between junior mining companies. While some companies remain necessarily focused on short-term survival, others are shifting their strategic focus toward pursuing new opportunities for growth."

Since the beginning of the year the index has soared by 89%. However, it has still declined 57% from last March’s record high, due to a rise in metal prices from China, the world's top consumer of many industrial metals.

A copper and gold explorer and developer in Kazakhstan, Frontier Mining, reportedly made the biggest recovery with its share price leaping by almost 1000% during the second quarter.

According to the advisory firm’s report, five mining firms delisted during Q2 and no new companies joined Aim for a third consecutive quarter, thus reducing the number of mining firms to 168.

Kimberley Consolidated Mining’s CEO le Riche Resigns

Hein le Riche has resigned from his position as CEO of Kimberley Consolidated Mining (KCM). According to Jewelry Biz-News, the resignation stems from le Riche’s intention to focus on negotiations with China National Geological and Mining (HK) on the diamond mining company’s behalf.

The diamond mining company stated that concluding a deal with the Chinese mining company would lead to a diversification of KCM’s interests beyond diamond mining. Phemelo Sehunelo, a company director, will serve as interim CEO until a permanent replacement is found. Le Riche will continue to be an executive director on KCM’s board of directors.

KCM owns the Bo-Karoo Mining Development Project, where diamond mining was suspended due to the global economic crisis, in addition to several diamond exploration projects in South Africa.

Japan Retail Sales Of Luxury & Jewelry Down 14.9% For July 2009

Department store sales in Japan in July fell 11.7 percent from one year ago on a same-store basis, the 17th straight month they have dropped, with July's being the largest decrease yet, an industry body said Tuesday. Sales for the month totaled $6.5 billion (JPY 618.58 billion). The year-on-year rate of decline was the largest since 1965, the first year from when comparable data is available.

The slumping sales were attributable to sluggish sales in the summer shopping season as personal consumption stalled amid the recession. Customer traffic dropped due to unseasonably cool and rainy weather, which also affected sales of swimsuits and other summer items.

The fact that some department stores launched bargain sale campaigns for summer items in June, instead of having them in July as usual, also contributed to the slump, because they ate into demand in July. The data covered 272 stores run by 87 department store chains. In terms of future prospects, the association expects rises in sales, as summer weather has returned in August, and due to the government's "eco-point" shopping incentive programs.

Seichi Iioka, senior managing director of the Japan Department Stores Association, said that if the rate of the year-on-year drop in sales is narrowed to around 5 percent in August, there is hope that sales will become firmer in September and October. During July, sales dropped in most of the industry's merchandise segments, with that of clothing plunging 15.6 percent, the 25th consecutive month of decreasing sales in the category. Sales of luxury art and jewelry items dropped 14.9 percent, and those of foods declined 6.9 percent. By area, sales rose only in the Hokkaido area, except the city of Sapporo, by 12.9 percent, the second consecutive month of growth, owing to a store-closing sale at an Asahikawa store operated by Marui Imai Inc., a department store chain in Hokkaido under court-supervised rehabilitation.

Rockwell Diamonds Generates $4M in July Sales

,Rockwell Diamonds generated sales of about $4 million in July, reporting that prices for rough diamonds mined at its South Africa-based operations continued to rise, particularly for smaller stones. The junior diamond mining company conducted two sales in July, at the beginning and end of the month.

The first of the two sales sold a total of 2,485.78 carats, generating revenues of $1.8 million, for an average price of $722.18 per carat. The second sale garnered $2.2 million for 1,809.38 carats, or $1,224.58 per carat. Rockwell explained that sales prices in late July showed an increase of approximately 10 percent, from the previous sale, for small rough stones below 0.75 carats, and about 5 percent for diamonds of 0.75 to 2.49 carats. Diamonds between 2.50 and 4.79 carats achieved similar prices to the previous sale, the company reported, but for better quality goods.

The average price achieved at Rockwell tenders has been on the rise. Rockwell noted prices at $531 per carat in March, $585 a carat in May, $700 a carat in June and $1,225 per carat in late July. These increases follow the 50 percent decline in prices toward the end of 2008, when demand shrank with the onslaught of the economic downturn. In response, Rockwell suspended diamond sales between December and February and scaled back its operations. The company reported that there has been stronger interest and attendance at its diamond tenders since June, with numbers in July “approaching the levels apparent in 2008.”

Rockwell noted good demand in the 2 to 10 carat rough diamond range, with the strongest buying focused on 2 to 5 carat stones. It added that demand and prices for 3 carat rough goods have been extremely strong since March, while those for stones 10 carats and larger have remained "subdued."

John Bristow, company chief executive officer (CEO), said that he foresees a steady overall improvement in prices for Rockwell’s production during the remainder of 2009, “albeit staying well below the highs of 2008.” Rockwell’s production across its three operating alluvial mines in South Africa — Holpan, Klipdam and Saxendrift — for March through July totaled 8,747.93 carats. Bristow said the company is considering resuming operations at the Wouterspan mine as the market strengthens.

Bristow recently overcame an attempt to oust him and two other senior managers by major shareholder Pala Investment Holdings due to weak performance of the company’s shares. The stock closed Monday trading on the Toronto Stock Exchange (TSX) at 5 cents a share, down 75 percent from a year ago. After failing in its takeover attempt, Pala reduced its stake in Rockwell from about 20 percent to 8.7 percent. Bristow stressed that with monthly production of 2,400 carats and continued average prices above $1,000 a carat, "the company is cash-flow positive, and as prices improve further, Rockwell will return to profitability."

WFDB President To Address Prodiam Seminar At Iberjoya Show

Avi Paz, president of the World Federation of Diamond Bourses (WFDB), will be among the industry leaders addressing the Prodiam Seminar, which will be held the day before the commencement of the Iberjoya international jewelry show in Spain from September 9 to 13, 2009. The annual Prodiam seminar covers a range of industry issues, from gemological testing to the diamond, gemstone and jewelry trade. The informative program attracts hundreds of people across the sector every year.

A portion of the program has been dedicated to providing the WFDB and diamond-related organizations with the opportunity to discuss various issues affecting both the Spanish and the international diamond markets. This coincides with the launch of the WFDB InterBourse Pavilion, the first-ever exclusive diamond trading area to be hosted at an exhibition.

"The diamond retail market in Spain has a lot of potential, and the WFDB would like to explain the importance of the WFDB Mark in order to increase consumer confidence in diamonds. One of the WFDB's aims is to create a level of assurance in the downstream market of wholesalers, dealers and retailers. It is therefore important for them to understand the best business practices followed by members of the WFDB and the code of ethics that the 28 diamond exchanges worldwide that are affiliated to the WFDB abide [by]." Paz stated.

Other featured panels include a presentation by Spanish representative Antonio Navarro, manager of Vanessnark, who will be discussing diamond trading in Spain and how the potential of the Spanish market can be realized. Mark van Bockstael, director of international relations for the Antwerp World Diamond Centre (AWDC), will address the international diamond market and the Kimberley process.

The WFDB InterBourse Pavilion will be prominently positioned at the exhibition, and has a total of 8 showcases and trading tables located within an attractively designed display area. The trading floor will be protected by additional security guards and closed-circuit cameras, providing a secure place to conduct business.

A few spaces remain available, with five diamond companies already committed to participating in this first-ever WFDB Interbourse pavilion. The committed companies are Diamond Centers International (DCI), Sage Diamonds and Rubin & Zonen, all of Antwerp, Belgium, and Eliezer Broide Diamonds and Leo Schachter Diamonds, both of Ramat Gan, Israel.

Investor From South Africa To Inject $100M In Zimbabwe Mineral Mines

Zimbabwe’s government-controlled The Herald reports that Raymond Ventefe, an investor from South Africa, is planning to inject $100 million into gold, coal, diamond and emerald mines in Zimbabwe. Ventefe is involved in fifteen gold mines in Kadoma.

Ventefe stated that his activity in Zimbabwe currently includes 15 small gold mines in Kadoma, and that he intends to invest R 2,250,000 in small mines. He believes that investing in the various mines could rejuvenate the Zimbabwe economy in a short period of time.

At the fifth annual Mining in Africa Conference, Zimbabwe Minister of Mines and Mining Development Obert Mpofu recently stated that Zimbabwe is open to foreign investments in the mining sector.

Friedman's And Crescent Jewelry Brand Names To Be Sold

Consor Intellectual Asset Management has been hired to sell the jewelry brand names including intellectual property and tangible assets of Friedman's Jewelers and Crescent Jewelers.

At its apex the Friedman's fine jewelry chain included 400 stores in 23 states.

In 2006, Friedman's purchased the Crescent jewelry brand, with more than 475 jewelry stores – at the time it became the third-largest jewelry chain in North America.

In 2008, Friedman’s fine jewelers filed for bankruptcy and liquidated all of its assets.

Doug Bania, director of business development for Consor, stated: "This is a unique opportunity for a new owner to leverage the awareness of two value-based jewelry brands. The ability to capitalize on the goodwill of names that are instantly recognizable to consumers can be invaluable to both established jewelers and newcomers to the jewelry industry."

Diamonds Rapidly Gaining Popularity In India

The Economic Times states that India’s domestic market is bolstering the recession-hit Indian diamond industry. According to the newspaper, diamond jewelry sales in India are expected to reach Rs 25,000 crore this fiscal year.

These estimates are significant as last year diamond sales were in the Rs 18,000-20,000 crore range. The diamond trade’s 20% growth is being attributed to the growing popularity of diamonds along with the increasing preference for this precious stone among investors. This trend constitutes a significant shift from India’s perception as a predominantly gold jewelry market.

Mehul Choksi, CMD of Gitanjali Gems and Chairman of Ficci’s Gems and Jewelry Committee, is quoted as saying: “Demand for diamond jewelry is increasing slowly in India. With gold prices increasing, people are moving towards diamond jewelry and this year, we expect diamond jewelry sales to touch Rs 25,000 crore here.” Choksi added that Diwali festival sales contribute more than 20% to the total diamond jewelry sales in the country. He predicted that during the current festival season diamond jewelry demand will be 50% higher than last year.

Analysts attribute the shift in consumer preference towards diamond jewelry to the rising gold prices. With gold prices hovering around Rs 15,000 per 10 gm, consumers are moving to diamond-studded, lightweight gold jewelry.

According to The Economic Times, since the financial crisis which struck the US jewelry industry, the Indian diamond industry has been promoting sales in China and the Middle East, in addition to the domestic market.

India’s Gem and Jewelry Export Promotion Council (GJEPC) is currently launching a campaign in 16 cities to promote domestic diamond jewelry sales.

Sanjay Kothari, convenor (promotion, marketing and business development) of GJEPC stated: “Around 25,000 buyers visited 1,500 stalls in India’s biggest jewelry show, India International Jewelry Show(IIJS), recently, out of which 22,000 buyers were from the domestic market. The sector is unorganized and it is difficult to give exact figures. However, we expect good sales of diamond jewelry in the country this year.”

Choksi noted that while the overall diamond jewelry business is expected to register a 20% growth, branded jewelers in the jewelry industry hope to register a 40-50% growth rate. Choksi pointed out that consumer awareness in connection to diamond certification is increasing, thus helping to promote jewelry brands. The demand for diamond and color stone-studded gold jewelry is not increasing only in large Indian cities, but also in medium and semi-urban areas.

GIA Laboratory Offers Services in Hong Kong Timed to Jewellery & Gem Fair

The Gemological Institute of America (GIA) will send a team of top gemological experts to offer additional laboratory services in Hong Kong from Sept. 16 to 29, to coincide with the Hong Kong Jewellery & Gem Fair. The show itself will run from Sept. 21 to 27.

During this two-week period, the GIA Laboratory will provide services from its Hong Kong Laboratory Service Center to the show’s attendees and vendors, as well as to the local trade and the general public. A special task force of GIA gemologists will be on hand to perform diamond grading services — on stones up to 9.99 carats — and all colored stone services. Reports will be issued on a daily basis.

“We have supplied laboratory services at trade shows before, but this is the first time we are offering such services well before, during and after the show,” said Tom Moses, senior vice president of GIA Laboratory and Research. “Providing these services prior to the show lets vendors get their items completed by GIA before the fair starts.”

Appointments are not required to drop off or pick up items at GIA’s Hong Kong Laboratory Service Center, its local take-in office, located at Room 1203, 12/F, Aon China Building, 29 Queen's Road Central. Hours are Monday through Friday, 9 a.m. to 6 p.m. local time. Items may also be submitted to the Malca-Amit show office at AsiaWorld-Expo for transfer to GIA from Sept. 21 to 25.

For more information, e-mail the service center at HKlabinfo@gia.edu or Sheryl Cashmore, Hong Kong Laboratory service director at scashmore@gia.edu. Interested parties can also call 852 3114 7102 or send a fax to 852 3114 7133

Singapore Jewelry Retail Sales Fall 13 Percent in June.

Singapore retail sales dropped for the ninth consecutive mouth in June as the city-state slowly emerges from a severe recession.

Retail sales fell 8.2 percent from a year earlier after dropping 10.4 percent in May and 11.7 percent in April, the statistics department said in a statement Friday.

Rising job losses and a slump in tourist arrivals have undermined retail sales. Singapore's economy grew for the first quarter in a year in the April to June period as gross domestic product expanded an annualized seasonally adjusted 20.7 percent.

"With the recovering economy, the labor picture should also improve and perhaps the tourist traffic as well," said David Cohen, an analyst with consultancy Action Economics in Singapore.

Sales of motor vehicles fell 23 percent, jewelry and watches dropped 13 percent, and apparel and footwear slid 2.5 percent, the department said. Computer and telecom equipment sales jumped 14 percent as retailers slashed prices.

Some economists were encouraged by an improvement in retail sales from May, which rose by a seasonally adjusted 2.3 percent.

"There is more and more evidence to suggest that the Singapore consumer is starting to spend again," said Robert Prior-Wandesforde, senior Asia economist with HSBC in Singapore.

"We're increasingly confident that Singapore's nascent economic recovery will broaden during the rest of this year and in 2010."

Associated Press Writer Bryna Djuhar in Singapore contributed to this report.

High Gold Prices Boost Diamond Sales

Who is cashing in on the high gold prices. No doubt, diamonds are making a killing following the rise in gold prices.

With the gold jewellery costing a fortune, India’s domestic market is shoring up the recession-hit diamond industry. For the first time, diamond jewellery sales in India will touch Rs 25,000 crore this fiscal. This is a big shift for the troubled industry as India has traditionally been a gold jewellery market.

The estimates for the fiscal are significant as last year the sales were in the Rs 18,000-20,000 crore range. The 20% growth in the business is being attributed to the growing popularity of diamonds along with the increasing acceptability of the precious stone among investors.

Demand for diamond jewellery is increasing slowly in India. With gold prices increasing, people are moving towards diamond jewellery and this year.

Diwali festival sales contribute more than 20% to the total diamond jewellery sales.

The changing consumer preference towards diamond jewellery may be attributed to the rising gold prices. Gold is hovering around Rs 15,000 per 10 gm, a reason enough for buyers to go for light weight gold jewellery, studded with diamonds.

India’s total jewellery business is around Rs 1.50 lakh crore. Gold prices are at their peak and consumers are purchasing diamond-studded gold jewellery in which the proportion of gold is minimized.

The Indian diamond industry faced troubled times after September 2008, when demand from the US and Europe touched its bottom.

The industry has since been promoting Indian diamonds in China and the Middle East, apart from the domestic market.

The Gem and Jewellery Export Promotion Council (GJEPC) will start a campaign in 16 cities to promote diamond jewellery sales.

While overall diamond jewellery business will register a growth of 20%, branded players in the segment will register a growth rate of 40-50%. Consumer awareness about diamond certification is increasing and it is helping branded players to gain more business.

U.S. Rough Diamond Imports Leap in Volume

The decline in U.S. diamond trade continued in June, as consumers continued to shy away from diamond jewelry and traders were mostly busy moving what ever inventory they have. Naturally, rough diamonds were in very limited demand.

The U.S. imported 345,826 carats of rough diamonds worth $47.51 million, an average value of $137.39 per carat. Year-over-year, the value of rough diamond imports declined 49.4 percent.

Rough diamond exports in June again exceeded imports. Exports stood at 425,148 carats with a stated value of $42.64 million. This is a doubling in the value of exports and a 157.8 percent growth in its volume.

The volume of imports in June was unusually large, compared to previous months. Most of the goods imported during the month, 332,131 carats, were imported from Angola.

The exceptionally large import, nearly 10 times of total imports in May (35,512 carats) and three times the amount imported in the first five months of 2009 put together carried an average value of $74.22 p/c.

Rough diamond imports in the first half of 2009 stood at 458,821 carats with a value of $131.53 million, this compared to 392,259 carats worth $448.3 million imported in the first half of 2008.

U.S. Polished Diamond Imports Plummet 72% in H1

The U.S. imported $976.6 million worth of polished diamonds in June, a 38.7 percent year-over-year decline. In the first half of 2009 $5.37 billion worth of polished diamonds were imported, a 71.6 percent decline compared to the first six months of 2008.

In terms of volume, June imports stood at 854,260 carats, a 3.6 percent decline, while the average value per carat (p/c) fell 36.4 percent to $1,143.22 p/c.

Exports in June totaled $965.75 million on shipments of 2,621,102 carats at an average value of $368.45 p/c.

Net imports stood at a low $10.86 million. However, while imports exceeded exports in value, in volume exports exceeded imports, resulting in a decrease of 1.77 million carats.

In the first half of 2009, the U.S. exported more goods then it imported, underscoring the weak demand for diamond jewelry in the U.S consumer market. Half year exports of 16.34 million carats at $6.63 billion, averaging $405.51 p/c, resulted in a net trade of -$1.24 billion.

Israel was the leading supplier of polished goods in June, supplying 175,453 carats worth $478.98 million, at an average value of $2,729.95 p/c. Exports to Israel, mainly returns, stood at 1,050,200 million carats worth $390.34 million.

India, the second largest supplier by value, was source of 518,561 carats valued at $236.44 million, averaging $455.95 p/c. Shipments to India of 283,683 were worth $132.29 million.

Singapore Revises FY Trade Growth Upwards To Between -23% and -21%

Singapore on Tuesday revised upwards its projected full-year trade to a contraction of between 21 per cent and 23 per cent, from previous estimates of a contraction between 22 per cent and 25 per cent. 2009 GDP Growth Forecast Maintained at -6.0 to -4.0 Percent.

Total external trade was up 3.8 percent from the preceding quarter, but down 27 percent from a year earlier.

Wholesale and retail trade +6.9 percent for 2Q 2009 compared with -29.3 percent for 1Q 2009.

Official data released by International Enterprise (IE) Singapore showed first signs of recovery in the second quarter of the year, with total trade up a seasonally adjusted 3.8 per cent after the previous quarter's decline of 14 per cent.

Compared the same period last year, total external trade for the period between April and June was down 27 per cent, slowing from a 28 per cent drop in the first quarter.

Total trade reached S$178 billion in the three months ended June, higher than the S$165 billion recorded in the first quarter of the year.

Total exports and imports declined 25 per cent and 28 per cent respectively in the second quarter.

Non-oil domestic exports (NODX), which make up around 60 per cent of the economy, increased 7.6 per cent on-quarter after seasonal adjustments. Over the same period last year, however, NODX fell 14 per cent on lower shipments of electronic and non-electronic NODX.

NODX to all top 10 NODX markets except Taiwan contracted in the April-June period, with the biggest contributors to the decline being the EU 27, the US and Malaysia.

The forecast for NODX growth in 2009 has hence been narrowed to a contraction of between 10 per cent and 12 per cent.

Despite signs of economic stabilisation in the second quarter, the Ministry of Trade and Industry (MTI) said economic recovery is subdued as global demand remains depressed, and external conditions are expected to stay weak for the rest of the year.

-CNA

Israel's July Polished Diamond Exports -52%

Israel’s polished diamond exports fell 52 percent to $398.9 million in July, according to data published by the Central Bureau of Statistics (CBS). Rough exports dropped 43 percent to $179 during the month. Total exports, polished and rough combined, declined 45 percent to $577.9 million.

The country’s total diamond imports decreased 53 percent to $414.9 million. CBS did not provide separate import data for rough and polished stones. Israel’s July net diamond account, representing the extent to which total diamond exports exceeded imports, fell 37 percent to $163 million.

During the first seven months of the year, Israel’s polished exports declined 57 percent to $1.97 billion, while rough exports dropped 60 percent to $994.1 million. Total exports were down 58 percent to $2.97 billion, and total imports decreased 63 percent to $2.19 billion. As a result, Israel’s net diamond account for January through July fell 30 percent to $777.4 million.

Iconic Argyle Pink Diamond Tender is showcased for the first time in India

Rio Tinto's 2009 Argyle Pink Diamond Tender is celebrating the 25th anniversary of its iconic offering of rare pink diamonds with its first ever viewing in India.

This exceptional collection comprises 43 of the rarest diamonds in the world and has been showcased in Mumbai to a select group of Indian diamantaires, collectors and high net worth individuals.

Commenting on the inaugural Mumbai viewings, Jean-Marc Lieberherr, General Manager for the sales and marketing for all diamonds from Rio Tinto's mines says,

"Presenting the Argyle Pink Diamond Tender in Mumbai is a reflection of the emerging importance of India as a source of demand for coloured diamonds. Whilst India has traditionally been a manufacturing centre for the champagne diamonds from the Argyle mine, we are now seeing signs of latent domestic demand for coloured diamonds in India. Earlier this year we had a great response from Indian diamantaires to our tender of rare blue diamonds from the Argyle mine and this encouraged us to look to Mumbai as a 2009 Pink Diamond Tender viewing location."

Titled Grand Passions, this year's tender collection comprises 43 stones, including a magnificent 2.61carat intense pink heart shaped diamond named Argyle AmourTM . One of four hearts in this year's collection, the Argyle AmourTM is the most valuable heart shaped pink diamond ever produced from the Argyle mine Exuding passion, romance and warmth, this extraordinary diamond captures all that is Amour. The two other "hero" stones set to captivate bidders are ShalimarTM, a 1.25 carat purplish pink round diamond named after the exotic garden sanctuary built by Indian emperor Jahangir for his beloved wife, and in the theme of legendary passions, ScarlettTM, a 1.10 carat red oval diamond.

Josephine Archer, Business Manager for Argyle Pink Diamonds, comments on the 2009 collection, "These diamonds are for appreciators of the truly exceptional and with around 10 years remaining of the Argyle Diamond Mine, these rare pink diamonds will be keenly contested by investors, collectors and diamond experts from around the world."

The Argyle Pink Diamond Tender will travel to a number of locations before concluding in Perth in late September.

Israeli Government To Underwrite Training of Diamond Polishers

At a meeting with the leaders of the Israeli diamond industry yesterday, Benjamin Ben-Eliezer, Israel’s minister of industry, trade and labor, said that he would help finance a professional training program for diamond polishers. The ministry program, to be implemented in 2009-2010, will train 100 unemployed individuals to become polishers on the level of “Excellent.”

Diamond leaders said that there is currently a shortage of “Excellent” diamond polishers in the Israeli industry, and that this step would increase local production by hundreds of millions of dollars. They said that all of the workers would be hired by local manufacturers.

Minister Ben-Eliezer said that this program is part of a package of measures to aid the local diamond industry, which has been hit hard by the world economic crisis. The minister said that he has asked the Ministry of Finance to find specific solutions to help the diamond industry, and that progress has been made in the area of credit with the Finance Ministry and the Israeli banks.

Moti Ganz, chairman of the Israel Diamond Institute (IDI) group of companies and president of the Israel Diamond Manufacturers Association (IsDMA), noted, “We view the training of “Excellent” diamond polishers as of great importance. This program will expand the know-how and capabilities of the industry, and will increase the export of Israeli diamonds, which are known for their high quality.”

Avi Paz, Israel Diamond Exchange (IDE) president, thanked Minister Ben-Eliezer for his efforts on behalf of the industry. “The government must take every step in order to assist the industry during this difficult time. This is the first step in a package of aid that is needed urgently by the Israeli diamond industry. Our highest priority is to receive government-backed credit. The world economic crisis has seriously affected the industry here, as it has around the world. We see that the governments of India and Belgium have aided their industries with billions of dollars of credit with government guarantees. It is important for Israel to maintain its leading position in the world, and for that government aid is essential.”

Eli Avidar, IDI managing director, said, “We are pleased with our cooperation with the Ministry of Industry, Trade and Labor, headed by Minister Ben-Eliezer, in the area of professional training. We are certain that this cooperation will bring new blood into the industry and new opportunities for employment.”

Peregrine Announces Four Additional Kimberlite Discoveries and Provides Exploration Update at Chidliak, Baffin Island, Nunavut

Peregrine Diamonds Ltd. (TSX:PGD - News) ("Peregrine") is pleased to report the discovery of four additional kimberlites on the 9,800 square kilometre Chidliak property ("Chidliak" or "the Property"), Baffin Island, Nunavut, Canada. The CH-6 kimberlite was discovered by drilling whereas the other three kimberlites, CH-7, CH-8 and CH-9, were discovered at surface while prospecting geophysical anomalies. Since commencement of the Chidliak summer exploration programme on July 3, six new kimberlites have been discovered, two by drilling and four by prospecting and mapping. Kimberlite samples collected from these discoveries will be processed this fall for microdiamonds to assess their diamond potential.

In addition to the four new kimberlite discoveries, two additional drill holes have been completed on the CH-1 kimberlite, over 850 indicator mineral samples have been collected, 58 geophysical anomalies have been evaluated on the ground by prospecting and geochemical sampling, kimberlite float was discovered by prospecting at four locations and the collection of a 50 tonne mini-bulk sample of kimberlite from a surface exposure at CH-1 has commenced. Kimberlite has been discovered at two of six geophysical anomalies drilled this year, CH-4 and CH-6, while the other four anomalies were explained by sulphides observed in the drill core. Portions of the sulphide-bearing drill core will be evaluated for base and precious metals potential.

The following table describes drilling done to date at the CH-6 and CH-1 kimberlites.

Reliance Jewels Launches Its First Mumbai Store

Reliance Jewels recently opened its first retail outfit in Mumbai at R -City Mall, Ghatkopar, reports say. The store offers a wide range of gold, diamond and wedding jewellery, culminating all jewellery requirements under one roof. Its range of jewellery designs numbers to over 10,000 incorporating the varied creative art from across the country.

The retailer distinguishes its jewellery portfolio with the backing of guarantee. It offers guarantee of purity, through its 100 percent BIS Hallmarked Gold used in every gold jewellery piece and diamonds certified by Independent Certification Laboratories. The retail venture offers high quality products at the most affordable value. It also offers customised jewellery making services.

To mark the feat of its first Mumbai store, the company has introduced an introductory promotion scheme of 50 percent discount on making charges for gold jewellery and upto 100 percent discount on making charges for diamond jewellery.

Reliance Jewels, is a venture initiated by Reliance Retail Limited, to delve into the fine jewellery specialty retail segment. The launch of the Mumbai store has taken the count of Reliance Jewels’ stores in India to 13.

Source: DiamondWorld

Cygnus Fine Jewellery to Open 40 Stores

Laxmi Diamond of Mumbai plans to expand its retail brand, Cygnus Fine Jewellery, by opening 40 standalone exclusive stores across India by 2010.

It also plans to establish its presence in 50 lifestyle stores. The company will open its own stores as well as franchisee outlets. It has set a turnover target of Rs2,000 crore for 2010-2011 and is focusing on expanding its traditional jewellery collection to achieve the same.

Blue Nile 2Q 2009 Sales -5%, Profits -11%

Blue Nile's second-quarter sales fell 5.2 percent to $69.9 million, and its profits declined 11 percent to $2.8 million. Sales in the U.S. were down 4.3 percent to $62.8 million. International sales decreased 12 percent to $7.1 million, but the company reported that the drop was driven almost entirely by the impact of foreign currency exchange rates, due to the strengthening of the dollar from last year. Excluding the effect of exchange rates, international sales fell 1.2 percent.

Operating income for the quarter declined 2.3 percent to $4.3 million, and operating margin increased by 30 basis points to 6.2 percent of net sales, compared with 5.9 percent of sales in the second quarter of 2008. Gross profit was $15 million, and as a percent of sales, this figure was up 100 basis points, to 21.5 percent from 20.5 percent.

“Blue Nile delivered excellent financial results in a challenging retail environment, with strong profitability and market-share gains,” said Diane Irvine, chief executive officer (CEO). “We are managing with focus and discipline throughout the business, enabling us to drive a record level of adjusted earnings before interest, taxes, depreciation and amortization (EBITDA) for a non-holiday quarter. Our financial performance reflects the way in which the Blue Nile brand and our compelling value proposition are resonating with consumers.”

Blue Nile expects sales in the third quarter to register at or slightly below those of the third quarter of 2008, according to Marc Stolzman, chief financial officer (CFO). “We are projecting full-year net sales between $288 million and $295 million, and diluted earnings per share (EPS) in the range of $0.78 to $0.82,” he said.

Tiffany New Store In Chadstone Australia

Tiffany & Co. will open a store in Chadstone, Australia, in November 2009. The planned Chadstone Shopping Centre location is undergoing a major renovation to accommodate the luxury retailer. Tiffany's architects and designers plan to create a "modern and gracious" store to showcase Tiffany's collections. Chadstone will become the fifth Tiffany location in Australia.

"We are very excited to open our doors in the Chadstone Centre's new and world-class facility," said Glen Schlehuber, managing director of Tiffany & Co. Australia. "Our prominent location is ideal for hosting the residents of Melbourne and our loyal Tiffany customers, and continuing our heritage of design and outstanding service for which Tiffany is known worldwide."

FUQI 2Q Sales +51%, Profits +88%

FUQI International's second-quarter sales rose 51 percent to $100.8 million, driven by strong wholesale activity and a jump in retail sales. Net income for the quarter grew 88 percent to $9.9 million. Wholesale revenue contributed approximately $92.5 million to total sales, up 40 percent from one year ago, and retail added $8.3 million in sales, a tenfold increase from 2008.

Cost of sales rose 40 percent to $83.5 million. Operating expenses increased 282 percent to $4.2 million. Gross profit margin for the second quarter grew 660 basis points to 17.2 percent. The improvement was primarily due to an increase of product segments and expansion in retail sales. FUQI also opened new jewelry counters during the period. FUQI held cash and cash equivalents of $49.3 million as of June 30, 2009, the end of the quarter, down from $56.6 million one year ago. The value of inventory rose 95 percent to $86.8 million.

"I am pleased to report that, our team has once again delivered strong second-quarter results," said Yu Kwai Chong, chairman of Shenzhen-based FUQI. "We believe this is an indication that our wholesale and retail strategy, combined with our vertically integrated operations and growing brand recognition, provides us with a blueprint for success and reflects the strength of our position in the growing Chinese jewelry marketplace." FUQI projected that its third-quarter revenue would be between $121.5 million and $131.3 million and its net income between $10.1 million and $11.1 million.

GIA New Sealing Service For Diamond

The Gemological Institute of America (GIA) today announced a new Diamond Sealing Service, which is now available to customers. The service is offered for D to Z diamonds that carry a GIA Diamond Grading Report or a GIA Diamond Dossier®, and for colored diamonds holding a GIA Colored Diamond Grading Report.

Donna Baker, GIA president and chief executive officer (CEO), made the announcement with Nirupa Bhatt, GIA managing director for India and the Middle East, at the IIJS Show in Mumbai. The new service seals the diamond together with its key grading information in a credit card-sized, tamper-resistant package. The sealed package keeps the stone, its report number and its primary gemological details such as report date, shape and the four Cs, together in a secure, easy-to-display packet.

The sealed package contains multiple security features, including the GIA hologram. The packet shows that the diamond has been graded by GIA and that the information in it matches the stone, which will help prevent attempts to misrepresent the item and its report.

The sealing service can be ordered at the time of grading for a fee of $9 per stone. A diamond can also be resubmitted for the sealing service for the $9 charge, with an additional grading fee applied.

Baker said, “GIA has been vigorously offering a wider array of services to accommodate the needs of its many different customers throughout the industry and the general public. As we continue to expand globally, we’re providing additional options and finding more opportunities to help solve customer problems in that market. In particular, we are interested in offering services that promote worldwide industry standards and reinforce consumer confidence.”

Bhatt said, “As the world’s largest diamond cutting and manufacturing center, India is also a clearing house for many diamond markets, some of which increasingly request this type of benefit. We are pleased to offer it to all our clients in this region and around the world.”

The sealing service can be requested at all GIA Laboratory or take-in locations worldwide, as well as online through GIA’s client portal, “My Laboratory.” For more information, please visit the GIA website at www.gia.edu.

About GIA:

An independent nonprofit organization, the Gemological Institute of America (GIA) is recognized as the world's foremost authority in gemology. Established in 1931, GIA has translated its expert knowledge into the most respected gemological education available. Early in the 1950s, GIA invented the famous Four Cs of Color, Cut, Clarity and Carat Weight. In 1953, the Institute created the International Diamond Grading System™ which, today, is recognized by virtually every professional jeweler in the world.

Through research, education, gemological laboratory services, and instrument development, the Institute is dedicated to ensuring the public trust in gems and jewelry by upholding the highest standards of integrity, academics, science, and professionalism. GIA can be found on the web at www.gia.edu. Media queries contact: Laura Simanton 760-603-4112 or Jessica Sachariason, 760-603-4197.

Shrenuj & Co Net Profits Drop By 26%

In the three months ending June 30, 2009, sales dipped by 20 percent for Shrenuj & Co and amounted to $31.6 million. Net profits decreased by 26 percent to $681,507 (INR 32.5 million) at the end of the said tenure, reports say.

In the backdrop of the economic slowdown the company did achieve reducing its expenses by 24 percent to $27.1 million (INR 1.3 billion).

Portugal To Sell Angola Diamond Firm Stake - report

The Portuguese government is seeking to sell a 49% stake in Angolan diamond-miner Sociedade Mineira de Lucapa, Publico newspaper said on Tuesday, citing a senior official.

Angola is one of the world's top five diamond producers.

The stake is held by the Portuguese Entrepreneurship Society (SPE), which is 81%-owned by the Portuguese government. Angola's state company Endiama controls the Lucapa mine via its 51% holding.

"It doesn't make sense keeping this stake in strategic terms. We are selling, regardless of the results," Publico quoted Portugal's Treasury and Finance Secretary Carlos Pina as saying.

Diamond firms in Angola are struggling to recover from a 75% drop in gem prices last year caused by the global economic downturn. The price slump prompted BHP Billiton, the world's biggest miner, to abandon its exploration projects in Angola.

Publico said SPE has been loss-making for the past two years, both in net and operating terms. Last year's net loss was 1,4-million euros and operating loss totalled one-million euros.

Endiama said last month it expects to produce between seven-million and nine-million carats of diamonds in 2009, compared with 8,9-million in 2008.

Financial Crisis Affecting Diamond Trade, African Development Bank Visit Botswana

The African development Bank (AfDB) Group President, Donald Kaberuka, will undertake a two-day official visit to Botswana, aimed at strengthening cooperation with the country, especially in relation to the financial crisis.

Top on the agenda of the 2-4 August 2009 visit is the signing of the agreement for a US$ 1.5 billion budget support loan approved by the AfDB Board in June to help fill part of the gap in the government's 2009/2010 budget deficit caused by falling commodity prices, particularly diamonds, the mainstay of the country's well-managed economy.

The loan falls within the framework of the recently approved strategy by the Bank to provide support to member countries affected by the financial crisis and is the largest such facility ever granted by the Bank.

It is the first such borrowing by Botswana in 17 years, from the Bank. Previously the country several times contributed to the replenishment of the African Development Fund (ADF), the soft window of the Bank Group.

The role of the Bank in mitigating the effects of the global economic downturn on African economies such as Botswana will be the main theme of President Kaberuka's breakfast meeting with the press on 3 August in Gaborone. He is expected to discuss the Bank's propositions for tailor-made solutions to mitigate the impact of the crisis, working with government and the private sector.

Mr. Kaberuka is also scheduled to hold discussions with President Sereste Khama and Finance and Development Planning Minister, Baledzi Gaolathe. Other top government officials and key public and private sector operators will get an idea of the Bank's activities in general, and what it is doing to assist African countries affected by the global economic crisis during a working lunch to be hosted by Minister Gaolathe.

According to the programme, the AfDB President and his delegation which includes the Senior Advisor to the Executive Director for Botswana, Wilfred Mandlebe, Country Director, Abdirahman Beileh and Governance Director, Gabriel Negatu, will round off the visit with a tour of the facilities of the Diamond Trading Company (DTC), the largest and most advanced diamond sorting facility in the world, or one of the Diamond Manufacturing Companies.

Since the commencement of lending operations in Botswana in 1973, the Bank has funded 32 operations with a total net commitment of about UA1.3 billion, focusing on social sectors, transport, communication, agriculture, finance and water supply and sanitation. This amount excludes emergency assistance.

Currently, there are two ongoing operations, the Pandamatenga agriculture infrastructure project and economic diversification support loan approved on 2 June 2009.

Besides lending operations, the Bank has provided some UA2.1 million under the Middle Income Countries (MIC) Trust Fund in support of non-lending operations: agriculture sector review, capacity building in Ministry of Agriculture, fast tracking the implementation of Vision 2016, corporate governance code, institutional strengthening of local government authorities for effective service delivery, and Kazungula bridge. It has also provided UA1.45 million under the Infrastructure Projects Preparation Facility (IPPF) in support of the Kazungula Bridge.

A new Country Strategy Paper (CSP) covering the period 2008-20019 was approved by the AfDB Board on 2 June, 2009. This new strategy focuses on expanding private sector investment and removing infrastructure bottlenecks to enhance competitiveness and growth.

* 1 UA Units of Account) = 1.58223 US$ on 20/07/2009

Source: Allafrica /Sponsorwire