Most people in the diamond business take a fairly casual interest in the ups and downs of De Beers.
Gone are the days when De Beers accounted for 80% or 90% of global rough diamond supply (it’s around 40-45% today), and in fact most people in the world of diamonds and jewellery don’t actually do any business with De Beers anyway.
That’s because the diamond mining giant sells its rough diamonds to a limited number (less than 100) of diamond cutting companies who then distribute the polished diamonds on to jewellers and retailers around the world.
But my background at De Beers means I still pay more attention than most, so when De Beers published their interim results for 2010 last week I took some time to study the results and to read the extensive press coverage that they generated over the weekend.
Rightly or wrongly, the result that usually leads the story is the top line number for Sales.
2009 was something of an annus horribilis for De Beers and for many in the diamond business (De Beers almost stopped mining for a while: diamond production dropped by over 90% in the first three months of the year), so analysts were looking for something of a rebound in 2010.
And as the chart below shows, sales of rough diamonds by De Beers did bounce back well in the first half of 2010. They’re not yet back to the $3+ billion figures seen in the pre-crisis years of 2006-2008, but 2010 is a marked improvement on the disastrous sales result from early 2009.
De Beers H1 rough diamond sales 2006-2010; source www.debeersgroup.com
On the back of improved sales over the last six months De Beers also pumped up its diamond production, which leapt from 6.6 million carats in H1 2009 to 15.4 million carats in H1 2010.
Looking forward, much now depends upon how those diamonds move through the ‘diamond pipeline’ – they still have some distance to travel once they’ve left the vaults at De Beers.
Diamonds often take months to cut & polish, and then there’s onward trading of polished diamonds (they can change hands several times), setting into jewellery, international distribution, more trading… all before they appear for sale on retailers’ shelves in time for the key Christmas season in the USA – the world’s largest diamond market.
So improved sales for rough diamonds in early 2010 is an encouraging portent as the industry restocks with diamonds following last year’s slump, but that optimism will be tempered by caution and anxiety about just how strong the recovery will prove to be at retail/consumer level.
Uncertainty over the recovery of demand in the US is offset by optimism about sustained demand growth in emerging markets such as India, and more particularly, China. But only up to a point: the US accounts for around 50% of global diamond consumption, and China might be growing fast, but it’s not yet even 10% of global demand.
Back to De Beers. I was impressed by something else in the figures: Net Earnings.
De Beers has cut its costs aggressively over the last 18 months and this has shown up in the figures in a striking way. Net Earnings (before special items) for the half year were regularly topping $300 million before the financial crisis took hold, but in 2009 earnings almost completely dried up – they were just $3m for the first half of the year, as shown below.
De Beers H1 Net Earnings 2006-2010; source www.debeersgroup.com
But look at the impressive rebound in 2010: Net Earnings are back up to $300m+, and those earnings have been generated from a fairly modest (in historical terms) sales figure.
So the tough medicine of slashing costs has worked: De Beers is generating cash once again – impressive cash for its current level of sales – allowing it to pay down some of its considerable debt and to begin to repay the shareholder loans that it took on to survive through the darkest days of last year’s slump in demand for its product.
The financial crisis took De Beers to the edge of the abyss, but it’s done what all good businesses should do in such circumstances: it turned the crisis into an opportunity. De Beers grasped the opportunity to look at its costs and it’s emerged from the crisis leaner, fitter, and better able to compete as the recovery gathers pace.
Perhaps even more eyecatching and surprising than the upbeat results last week was the news that De Beers CEO, Gareth Penny, is to step down by the end of the year.
Penny has been at De Beers for 22 years and has run the company for the last 5 years. I should declare something of a personal interest here: I worked for Gareth for most of the last decade and I acted as his personal assistant for a period in 2003-2004.
The diamond industry has – in my experience – always been fairly conservative, traditional, and family-based (De Beers is still part-owned and run by the Oppenheimer family). In some ways of course, that’s a strength rather than a weakness.
Change tends to come slowly to De Beers and to the diamond industry. Perhaps that’s inevitable in a business that deals with a product that’s up to 4 billion years old: A diamond is forever, after all.
But the rate of change within the diamond business has increased over the last decade. Not everybody signed up to the changes – they never do – and no doubt some wrong turns were taken in the chaos and upheaval created by the new environment.
Gareth Penny has been at the forefront of the changes that have come to De Beers and to the diamond industry in recent years.
He led a major strategic review at De Beers a decade ago – a review that guided De Beers out from behind the iron curtain of monopolistic practices – and the repercussions of that review are still being felt by the company and by the industry.
For the industry, it meant that many diamond businesses were encouraged to turn around, to look downstream to face consumers rather than upstream to worship at the feet of De Beers.
As a result, lots of money was wasted on ill-conceived marketing initiatives: not every business can or should be involved in consumer marketing. Many businesses in the middle of the diamond pipeline know that their strength is in understanding the needs of their immediate customers rather than trying to understand and reach consumers half a world away.
But lots of money is wasted on ill-conceived marketing initiatives by lots of companies in all industries. And just because some diamond companies invested in some pretty dodgy marketing schemes completely lacking in consumer appeal – well, let’s just say that it became a little too easy, predictable and routine to blame De Beers for one’s own strategic errors.
For De Beers, Gareth Penny’s legacy has included a much greater focus on social responsibility (which in turn changed the broader industry, although there is much still to do, viz Zimbabwe), and also a newfound zeal for legal compliance which led to important deals with the European Commission and the US Department of Justice (although class action suits continue to cause trouble for De Beers in the US).
Penny played a major role in dragging a monopolistic 120+ year old company into the 21st century, and his policies changed not just De Beers but also impacted upon the wider diamond and jewellery industries.
His last couple of years at De Beers were dominated by steering the company through the financial crisis, something he seems to have done remarkably well, but I suspect he would rather be remembered for the profound strategic changes that he launched a decade ago than for the cost-cutting of the recent past.
Well, we can’t always choose our legacy, and in any event, Gareth Penny has chosen to quit whilst he’s ahead, and that’s not a bad thing to do.
You can visit the Diamondthrills Blog here and read the original post here
I was jogging on a treadmill at the gym last week when I spotted images of diamonds on Sky News on one of the club TVs.
Now diamonds don’t make it onto the mainstream news channels too often so I hurriedly tuned in so that I could watch and listen to the report.
The subject was the meeting of something called the ‘Kimberley Process’, taking place in Israel last week, and more specifically the diamond industry response to what’s been happening in Zimbabwe.
A bit of background: like most of its neighbours, Zimbabwe is a diamond-producing country, but not a major one in global terms.
When industry website IdexOnline published its overview of the 2009 diamond ‘pipeline’ earlier this year it estimated that Zimbabwe produced around 2.5 million carats of diamonds at a value of perhaps $80 million – that’s just less than 1% of their estimate of the total value of global production last year of £8.46 billion.
Now Zimbabwe might be producing rather more than that – it’s hard to tell (of which more in a moment).
But then again last year was a lean year for diamond production because major producers such as De Beers cut back massively, wisely deciding that if they were going to struggle to sell the diamonds then they would be better off leaving them in the ground.
According to Idex, global production in 2008 was $14.8 billion, in which case this ‘theoretical’ Zimbabwe production of $80m would be around 0.5% of the global total.
Zimbabwe’s production is so hard to quantify because of the failings of both the Zimbabwe regime and the Kimberley Process.
The Kimberley Process was set up by the diamond industry and relevant governments and NGOs to stem the flow of conflict diamonds – the sort of thing that was depicted in the movie Blood Diamond starring Leonardo DiCaprio and set in Sierra Leone in the late 1990s when that country was ravaged by civil war.
The Kimberley Process has scored some notable successes over the last decade but it has failed in respect of Zimbabwe, and that’s partly because what’s been going on there is not a civil war or a ‘conflict’ in the same sense that conflicts took place in Zaire (now DR Congo), Angola, and Sierra Leone.
But the absence of an overt conflict in Zimbabwe does not mean that all is well there in the diamond trade – far from it.
You can find the gory details elsewhere, but there have been credible reports of killings by security forces, forced labour, child labour, and the imprisonment of a human rights activist.
And it almost goes without saying that the brutal Mugabe regime is mixed up in all this, with allegations that people around Mugabe are profiting handsomely from the nation’s lucrative diamond resources.
The response from the Kimberley Process regulators was to ban exports of diamonds from Zimbabwe, and they helpfully circulated images of uncut diamonds from Zimbabwe (below) to help traders recognise them.
But of course diamonds are all too easy to smuggle, and nobody believes that banned Zimbabwe diamonds are not leaking out into the legitimate diamond trade where unscrupulous traders (and there too many of those…) will mix these illicit diamonds into parcels of diamonds from legitimate sources.
To make things worse, the Zimbabwe Government brazenly declared this week that it planned to sell its considerable diamond stockpiles anyway, regardless of the Kimberley Process ban.
Meanwhile the regulators meeting in Israel failed to agree on a way forward, so the meeting ended in deadlock and the issue was kicked into the long grass until their next meeting to be held in St Petersburg.
Well you probably won’t hear about this sort of thing on other consumer-facing diamond & jewellery websites, and if you walk into a jewellery boutique they’re unlikely to volunteer this information to you; if you do ask them about Zimbabwe and diamonds they’ll most likely look at you blankly because they don’t know enough to comment or to offer you convincing reassurance.
The diamond industry doesn’t like to shine a light on its own shortcomings (who does?), and of course the risk for the industry is that consumers recoil from diamonds altogether and choose to spend their precious cash on something else.
We know this, but we believe that people want and deserve more and more transparency about the products that they buy (or rent!), so we’re prepared to learn as much as we can about what’s going on in places like Zimbabwe, and to write about it so that you have accurate information and can make an informed decision.
The diamond industry is embarrassed by Zimbabwe and would like to solve the problem, but politics and bureaucracy and conflicting interests and corruption prevent that from happening, and the Kimberley Process seems impotent and unable to come up with the answers.
In a way, they’re damned if they do and damned if they don’t, and we don’t envy them their task.
If exports from Zimbabwe are resumed then the revenues from diamond sales will flow into the hands of the brutal Mugabe regime and the industry will be seen to approve of – or at least tolerate – the conditions in which the diamonds are being mined.
But under the export ban diamonds are leaking out of the country anyway, revenues are ending up in many of the same corrupt hands, and conditions on the ground don’t improve.
Meanwhile, the violence and lawlessness of the Marange diamond fields ensure that Zimbabwe continues to be an affront to democracy and a stain on both the diamond industry and the Kimberley Process.
It doesn’t matter that it’s only 0.5% or 1% of world diamond production. Diamonds are emotive and women buy or wear diamond jewellery because of how it makes them feel.
Zimbabwe is an important test for the Kimberley Process and last week it failed that test.
We just thought you should know.
original post here
Oh dear. These novelty diamond things just keep on coming.
It’s been barely a week since the launch of the iPhone 4g, but that hasn’t deterred Stuart Hughes from smearing one with diamonds.
Classy
This little gem features around 6.5 carats of VVS clarity / F colour diamonds, with the Apple logo on the back fashioned out of platinum and studded with diamonds.
A limited edition of ‘just 50′ will be made, according to Hughes’ website, so hurry along now and snap one up for £12,995.
Quite what you do with your £13,000 iPhone 4g when it becomes obsolescent in 12-18 months time… well, we could make a few suggestions.
Oh, and in case you’re balancing on a knife edge of indecision about buying one of these beauties, it comes with a very special accessory: a wallet made from an Ostrich’s foot. At some point we’re going to start believing that this is satire dreamt up by The Daily Mash…
We can think of a few England footballers who deserve one of these – it’s about as classy as their performance at the World Cup.
Hat-tip to Gizmondo.
Original post here.
The eyes of the world are on South Africa and one local jeweller has cashed in on the attention by coming up with a couple of novelty applications for diamonds.
We’ve blogged about this sort of thing before (diamond iPads, iPhones, cakes, and a diamond Wii), so here we’ll hold back on the comment and simply show you this week’s blinged-up everyday objects. Here they are:
Both of these shiny objects have been brought to the world by SA-based jeweller Shimansky.
For the record, the tattoo features 612 Shimansky Ideal Cut 0.5 carat diamonds, stuck to the model’s skin using a special water-based adhesive in an 8-hour application process, whilst the football is adorned by 6,620 white diamonds and 2,640 black diamonds – a total diamond weight of 3,500 carats.
Reports have valued the tattoo at £640,000 and the football at £1.8 million.
Original post here
Now I haven't seen the film (not really my thing: I'm a man...), but I've noticed quite a lot of buzz about a black diamond that enjoys a prominent cameo role in Sex And The City 2.
** Spoiler Alert! If you really don't want to know how the film ends then don't read on! **
Still With me? Good.
In the final scene, Big gives Carrie a diamond ring and tells her, "Because you're not like anybody else".
The diamond ring is somewhat unusual in that it features a 5 carat black diamond (pictured, above).
The ring was created by designer Itay Malkin, and in addition to that eye-popping 5 carat black diamond, it features 80 round pavé-set white diamonds weighing a total of 0.35 carats. The diamonds are set in 18 karat white gold.
Black diamonds are unusual but they are becoming more fashionable (and this placement in SATC2 will of course add to their popularity).
The blackness in natural black diamonds is caused by millions of microscopic inclusions spread throughout the stone.
Some natural black diamonds are referred to as carbonado diamonds (a Portuguese word - they were found in Brazil and the Central African Republic), and there was a theory doing the rounds a couple of years ago that these diamonds came from outer space, falling to Earth in a meteor 2.3 billion years ago.
Another theory has it that black diamonds were formed during shock metamorphism - the result of an explosive meteoric impact on the Earth's surface.
More prosaically, black diamonds can be created in a laboratory (although these technically should not be referred to as diamonds) or as a result of special treatments that can be applied to more common non-black diamonds.
In any event, thanks to the inevitable commercial spin-off from the SATC2 movie, fans can buy one of a limited edition of 'identical' rings for $10,000 from designer Itay Malkin or the film's costume designer Patricia Field.
Given that a 5 carat diamond ring would normally cost a lot more than $10,000 (we just checked a leading online supplier, and the minimum price for a 5 carat diamond was over $50,000), we can't help but wonder just how natural and 'diamond-y' these $10,000 rings really are...
We say: Caveat emptor! But then Hollywood is all about illusion, fakery & pretence, right?
Original post here.
We don’t normally pay much attention to the State Opening of Parliament, but yesterday’s ceremonials were a bit special to us, and not just because we have a shiny new coalition government in place in the UK for the first time in anyone’s memory.
Some months ago we had an enquiry about our stunning Hestia tiara (below), but not for a wedding: our customer was interested in hiring the tiara for the State Opening of Parliament, on a date yet to be set (this was before the UK election was called).
And so it came to pass: our tiara was perched atop an aristocratic head during the Queen’s Speech in the House of Lords in Parliament here in London, and we’re told that it got lots of appreciative comments from all sides.
Of course it also gave us an excuse to watch ‘The Gracious Speech’ (as it’s known) and we couldn’t help but notice that our precious tiara was jostling for attention, and, well yes perhaps we must concede that it was being upstaged somewhat by the crown that the Queen was wearing.
So we did what all loyal UK subjects should do in such circumstances: we didn’t really listen to what Her Majesty was saying about the important legislative plans for Her Government, we started doing a bit of research into what she was wearing.
And here’s what we discovered: for the State Opening of Parliament the Queen wears the Imperial State Crown (below).
The crown is adorned with over 3000 gems, mostly diamonds, but also rubies, sapphires, emeralds and pearls.
Others will highlight the ‘Black Prince Ruby’, the ‘Stuart Sapphire’, or the ‘St. Edward’s Sapphire’.
But we reckon that the main event is the Cullinan II diamond which sits on the front of the crown and weighs in at 317.4 carats.
The Cullinan II diamond is sometimes called the Lesser Star of Africa. It’s the second biggest polished diamond cut from the world’s largest gem quality rough diamond ever discovered, the 3,106.75 carat Cullinan Diamond from the Premier Mine (later called the Cullinan Mine) in South Africa, unearthed in 1905.
Which is all very impressive of course, but the Imperial State Crown makes regular appearances in Parliament so it’s not much of a story in its own right.
So please forgive us if we dwell on the debut appearance of our Hestia tiara in such a historical setting.
We got quite a thrill to see our relatively humble jewels rubbing shoulders with our shiny new Prime Minister, Her Majesty the Queen, the Imperial State Crown, and the Cullinan II diamond — absolute royalty in the world of jewels, and pretty good company for Diamondthrills to be keeping!
If you would like to experience the thrill of being adorned by our magnificent Hestia tiara at your wedding or special event, then please get in touch and we’ll make it available to you — provided that it’s not already booked out for any more state occasions, of course.
Original post here.
Just last week we asked a customer about this because his wife wore a diamond necklace with matching earrings (pictured, right) to a family wedding.
Now the retail cost of this jewellery would be around £12,500 – probably rather more from a fancy Bond Street boutique – and our customer told us that their fellow wedding guests admired the diamond jewellery and asked about it.
So did they tell those admirers that they didn’t own the jewellery, but that they had hired it for the evening?
No: they said that the jewellery was a ‘gift’ and left it at that.
Well we want people to enjoy wearing our diamonds on special occasions such as weddings, so whether they come clean about the fact that the jewellery is not theirs is – to us – quite immaterial.
For us it’s about the experience of the moment – the evening, the wedding, the party – rather than the commitment of ownership or the symbolism of a gift of love.
They say that ‘A diamond is forever’ – well, of course, it will last forever, but you’ll only get to wear that diamond for a tiny fraction of eternity, and frankly, an evening or a weekend is not so very different to a human lifetime when set against the geological, eternal, forever-ness of a diamond.
Anyway, it got us thinking…
When we first had the idea for Diamondthrills a couple of years ago, we did worry that renting diamond jewellery would be a bit infra dig [from the Latin infra dignitatem, literally - 'beneath (one's) dignity'].
And that therefore people might not want to do it, or if they did, to not talk about it, in much the same way that a chap might go to a smart black tie function but would be reluctant to admit that he had hired the dinner jacket he’s wearing.
But as we did more research and talked to more women, and especially as the gathering storm of the recession set in, it became clear that for many people the idea of hiring jewellery would be seen as smart and savvy, a clever way to accessorise with stunning diamond jewellery for a special occasion, but without the high cost and commitment of ownership.
So, far from clamming up and not wanting to talk about it, we found that lots of women would actually boast about how clever they were being by hiring diamond jewellery!
Well, that’s music to our ears, of course.
And for those – like our customer last week – who don’t want to broadcast the fact that those diamonds they’re wearing are on loan, well that’s fine too. Your secret is safe with us.
We hear often that someone's been told they 'must' get a diamond that's at least 1 carat (or whatever...) but how about going to the opposite end of the scale?
Well that's what a diamond cutter in India set out to do recently by cutting & polishing the world's smallest diamond.
Surat-based Bhavani Gems have unveiled a diamond that weighs just 0.0003 carats, or 0.00006 grams. They've called it the Bhavani Mikro diamond.
One can imagine an unveiling ceremony: a stage with a plinth illuminated by brilliant lighting... dramatic music... and then the curtain is lifted to reveal... well, nothing really. Or nothing very visible, anyway.
For this diamond is about the size of a grain of sand, and yet it has been cut with the same number of facets - 57 - that you'd see on a conventional 'round brilliant' diamond of 1 carat or 100 carats.
The diamond has even been certified by the IGI (International Gemological Institute) - a neat self-promotional trick by them. Diamond grading laboratories usually certify diamonds starting at around 0.20-0.30 carats.
In my previous life at De Beers I had the pleasure and privilege of visiting a number of Bhavani Gems' diamond cutting factories - I actually did a tour of northern Gujarat with their charming founder and CEO Manjibhai Dholakia some years ago - and can vouch for their amazing skills in cutting really small diamonds.
Normally diamonds don't come much smaller than around '1 point' (one hundredth of a carat), but the Swiss watch industry and some other jewellers use diamonds of around 0.002 to 0.005 carats (when they get this small they are referred to as 500 per carat or 200 per carat).
Using the same terminology, this diamond is an incredible 3333 per carat - meaning that you'd need 3333 of them to make up a 1 carat diamond ring!
Rather than producing thousands of such small diamonds to set into diamond rings, I expect that this is a bit of a one-off exercise, designed to showcase the expertise of Bhavani Gems in cutting very small diamonds for the diamond watch industry.
Original post here.
