November 2012 Diamond News
Amazing Results at the Argyle Tender
The Argyle mine in Western Australia is the worlds leading producer of Natural Pink diamonds. Producing 90 percent globally, the mines supply of these rare pink stones is said to have a shelf life of less than 10 years.
With this knowledge in hand, it is no surprise that this year’s sale, the 28th annual Argyle Pink Diamonds Tender, was so successful. The private event which brought in record prices, launched in September 2012 from Perth, Australia. From there the diamonds made a stop in Hong Kong before reaching their final destination in London: in honor of her Majesty Queen Elizabeth’s Diamond Jubilee.
This years tender, designated the “Rainbow Tender” due to the range of colors presented included two exceptional red diamonds, 19 blue and 56 pinks.
The stars of the show were without a doubt the:
• Argyle Siren: A 1.32-carat square radiant cut VS2 Fancy Vivid Purplish-Pink.
• Argyle Satine: A 1.02-carat Fancy Intense Purplish Pink, cushion-cut diamond
• Argyle Allure: A heart-shaped 0.33 carat Fancy Dark Gray Violet
• Argyle Heloise: A spectacular violet stone
So, what is the Argyle Tender?
The now famous Argyle Pink Diamond Tender is an exclusive event catering to serious diamond investors and collectors. Attendance is strictly invitation only and bids are taken through a process of sealed tenders: final prices are not revealed. Although reports estimate that some of the strongest bids came from the newly established Indian and Asian markets.
Prior to the event, Josephine Johnson, Manager of Argyle Pink Diamonds stated that the “highly sought after collection of rare pink, red and blue diamonds” of this year’s tender collection are “destined for investment portfolios or heritage pieces of jewelry.”
It would seem that she was 100 percent correct in her statement, which may make you wonder how she knew?
First among the speculation as to why this year’s tender generated such strong prices is the estimation that the mine closing date is 2017. This suggestion and the over all triumph of this years tender certainly provide evidence of the ever-increasing value and escalating rarity of Natural Colored Diamonds.
Diamonds Shine in Singapore
The Yellow Dragon, a whopping 110-carat natural yellow diamond with an estimated worth of $11- $15 million is a remarkable sight. You might think a diamond of this caliber would be destined for developed gem markets such as Hong Kong, London, Geneva or New York. The Golden Dragon however, made its début in Singapore showing the world the power and influence new markets are having on the diamond industry.
Vihari Sheth, managing director of Vihari Jewels is the diamond trader who brought this king of Yellow Diamonds to Singapore. Relying on the rising interest in precious gems and seeing the potential for luxury investment in this developing market.
Of the choice of venues, Sheth stated, “There’s a lot more growth because it’s such a small market in Singapore, and people who are coming in are becoming more aware of what’s going on.” Adding, “It’s only going to double, there’s always going to be demand for something which is this high-end and exclusive.”
In Singapore, roughly 1,305 people rank as ultra high net worth with an approximate $155 billion total wealth. Most of Sheth’s clients are permanent residents who fall into the 40-50 year old age group and have an interest in 5-carat to 20-carat diamonds, valued between $500,000 to $6 million.
Eliad Cohen, managing director of diamond manufacturing and trading company Novel Collection Asia characterizes Singapore as a regional diamond center.
Stating, “Singapore lacks a premier diamond show to draw the biggest names in the industry, and its general 7 percent value-added tax (VAT) also applies to loose diamonds and jewellery, making it tough for the city state to develop as a diamond market. Regardless of whether or not this VAT can be recovered by overseas purchasers, it clearly acts as a deterrent for tourists to buy in Singapore, and encourages locals to purchase in no-tax jurisdictions, like Hong Kong”.
Still, the overall success in this market stems from the fact that diamonds are not simply status symbols but are valued as an investment option.
Rough Diamond Shortage for Diamonds Sightholders in 2013
The third quarter of 2012 brings bad news for De Beers and their sightholders in India. Information from industry insiders reveals a 20 percent decline in rough diamond production in the first part of the year and a further decrease of 31 percent in the last quarter.
While Indian companies based in Surat, Mumbai, Antwerp, Hong Kong and Dubai hold major shares in DeBeers rough sales: executives at the company regret that they will be incapable of meeting short-term demand.
As to the reasons behind the shortfall, De Beers parent company, Anglo American, names three pivotal causes:
• A slow polished diamond market
• Credit restricted market conditions
• A slope failure in Botswana that affected their Jwaneng mine
The yearly demand for rough diamonds in India is cited as $8-$9 billion. Although the diamantaires receive some rough diamonds from Canada and Africa, they obtain around 70 percent from De Beers, Alrosa and Rio Tinto.
“There is going to be fewer goods on offer by De Beers in 2013 following decline in diamond production. If the market improves after Diwali festival, the demand for rough diamonds is likely to increase.” Said one A DTC sightholder
The down turn in diamond production from De Beers will mean a shortage in 2013.
BHP Says Farewell to Diamonds
Leading global resources company BHP Billiton is saying goodbye to the diamond industry after finishing negotiations for EKATI, its diamond mine located in Canada’s Northwest Territories.
Concluding a yearlong process of give and take, US Diamond Company Harry Winston has agreed to purchase BHP’s 80 percent shares for US$500 million ($623 million).
Although the geologists (minority partners in EKATI) who discovered the deposit are being given 60 days to match the offer, it is expected that Harry Winston will close the deal prior to March 2013. Of course, this is all subject to approval from Canadian regulators.
The sale comes as no surprise. Earlier in April Robert Gannicott, a chief executive at Harry Winson said the company was “certainly interested” in acquisitions as long as the assets were “well defined” and centered on Canada.
No stranger to diamond mining in Canada, Harry Winston is a joint venture partner with Rio Tinto in Canada’s Diavik mine: with an option for first right of refusal on purchasing Tinto’s 60 percent stake .
BHP Billiton is among the world’s largest producers of major commodities with a solid reputation for acquisition, development and marketing of natural resources. Although the overall outlook for diamonds is encouraging, on a global scale they industry is considered small. Therefore, BHP is diverting energy to larger projects with big bulk commodities such as iron ore.
Andrew Mackenzie, BHP’s chief of non-ferrous said, “The divestment of EKATI is consistent with our focus on large, long-life, low-cost, expandable, upstream assets and together with the recent sale of our interests in Richards Bay Minerals and Yeelirrie, reflects our ongoing pursuit of a simpler business,”