Grading on a curve

The following article is published courtesy of: National Jeweler

Intellectual property: National Jeweler

Author: Michelle Graff

In the past year, the jewelry industry pipeline became a house of cards, with the Main Street jeweler in Ohio, the wholesaler in Rhode Island and the gemstone grader in Manhattan sharing precariously close quarters.here to download National Jeweler‘s Web-only grading lab supplement, featuring images of and details on gemological grading reports produced by dozens of gemological laboratories and other service providers.
A lower-priced jewelry niche

After retailers across the country waited in vain for the 2008 holiday rush, the dollars that never came managed to knock everyone flat–retailers, suppliers and gemological laboratories alike. In 2009, the focus was on rebuilding and survival.  

So what about 2010? The heads of the world’s grading laboratories all seem to agree that the laboratory business has improved dramatically in a year’s time. But, this is not to say that the labs are back to 100 percent, or that the gem world’s grading experts know exactly what “100 percent” looks like for the jewelry industry anymore.

Lab executives are taking a cautious approach to 2010, watching their budgets carefully and hiring back some, but not all, of the employees they were forced to lay off at the height of the downturn.

Among the wary lab chiefs is Tom Moses, senior vice president of laboratory research at the Gemological Institute of America (GIA), who says that after laying off staff and cutting back hours in 2009, the lab has managed to put its workers back on a full-time schedule and to rehire a portion of the staff it was forced to let go.

But–and here’s that tricky number again–the staffing levels are still not 100 percent what they were before the economic crisis struck the industry.

“We’re still trying to watch our expenses very carefully,” Moses says, adding that he doesn’t know when, or if, the lab will ever return to pre-recession staffing levels in a world where tightly managed budgets have become the norm.

“To some degree, it will never stop,” he says. “I think the lesson we all learned has been a very hard one, one we probably should have figured out sooner. Maybe this is going to be the ‘new normal’ for a very long time.”
 
Click

Back on the job

Understanding how it all came to this requires a look back. For the jewelry industry, 2009 started off with a sense of foreboding, says David Weinstein, executive director of New York’s International Gemological Institute (IGI) USA.

“In March 2009, I think everybody was really uncertain about what was going to happen,” he says.

At that point, the industry was recovering from a 2008 holiday shopping season that was a bomb for the majority of retailers, giving way to an early 2009 that was dismal at best, with one grading lab, the American Gem Trade Association Gemological Testing Center (AGTA-GTC), going out of business entirely.

“[But] that was all last year,” Weinstein says. “It seems to be totally, totally different this year.”

After letting go of one-third of its staff in 2009 and putting the remainder on reduced hours, IGI USA gradually has been able to put its staffers back on the clock full time and it has also rehired a significant percentage of those who received pink slips.

Weinstein says, from the lab’s perspective, it seems that the recent holiday season was “good enough” for most retailers, and that stores had sold a sufficient amount of merchandise to feel comfortable reordering, thus allowing the lab to stay busy throughout the fall and continuing into the month of February.

Normally, the bulk of the lab’s work in January involves appraising merchandise for major retailers and diamond companies that are publicly traded and need to submit annual audits, Weinstein says.

This year, the volume of unexpected goods  “coming in through the windows” for grading in January and continuing into February has been very strong as well, he says.  

“It felt like we were a month and a half [before] Christmas and yet here we were, in January 2010,” Weinstein says.

Among other laboratory officials noting a market upturn is Peter Yantzer, who is executive director of the American Gem Society Laboratories (AGS Lab) in Las Vegas.

At the worst point during the recession, Yantzer says his lab was forced to cut its staff in half, from 42 employees to just 21. As the economy has improved, the lab has been able to add back a total of seven staffers, bringing the employee head count up to 28.

Still, the lab’s research budget remains frozen until next year.

“I think we’re out of the woods,” Yantzer says. “[But] I don’t think it’s going to be back to gangbuster days for a while. There’s too many things going on in the world these days. It’s very unsettled.”
 
American Gemological Laboratory (AGL) President Chris Smith reports that his business, too, has started to pick up after a slow 2009. The lab, which specializes in the grading of colored gemstones, is also experiencing a bit of a windfall since AGTA-GTC closed in late July.

“We were all surprised by the closure of the AGTA-GTC,” he says. “However, it closed during the slowest time of 2009, so we did not experience any immediate increase in submissions.”

Since then, though, AGL has been collaborating with the AGTA, participating in show events and offering special discounts to AGTA members, all of which has added up to extra business.

“Members of our industry still require high-quality colored stone reports for identification, enhancement and country-of origin, and I am pleased to indicate that many AGTA members are entrusting AGL to provide these services,” Smith says.

For Moses, the uptick in GIA’s diamond-grading business, which he describes as significantly improved from a year ago, is not all due to homegrown demand.

Increasing consumer desire for diamonds in the Middle East, China and India–three markets consistently pegged by analysts as representing the future of consumer diamond demand–is contributing to the uptick in GIA’s diamond-grading business, he says.

Going forward, Moses predicts demand will continue to strengthen in these markets while the U.S. economy, ideally, recovers. Like Yantzer, though, Moses couldn’t hazard a guess as to how long it will be before the recession is a distant memory.

“That timeline, I just have no idea,” he says.

While the pace of the recovery is anybody’s guess, one trend labs nationwide definitively agree on is a desire among retailers to pay labs to examine less-expensive jewelry and provide reports for such pieces.
Gemma News Service‘s note: This article will appear in the April 2010 print edition of National Jeweler.

The reason for this, lab officials agree, is that retailers want to give spending-shy, ultra-conscious consumers extra assurance about quality when they are buying fine jewelry.

Rachel Chanowitz, director of sales and marketing at EGL USA, says today’s consumer would be more likely to select a $300 diamond pendant with a lab report attached than a piece that is brought out of the showcase, sans certification.

The post-recession consumer no longer parts with money so easily, and when shoppers do decide to spend, they want to make sure they know exactly what they’re getting for the money.
 
“[They] don’t want to make a mistake,” Chanowitz says. “They’re buying more conscientiously.”

In addition to grading more lower-priced pieces, Chanowitz says EGL USA is also seeing an increase in demand from independent retailers for special diamond grading certificates, such as light performance documents or reports that highlight special cuts, such as the hearts and arrows cut.

Being able to hand consumers a unique report gives a diamond a bit of extra cachet and helps the independent retailer separate the gem from similar–and likely lower-priced–stones advertised on the Internet.

“That has been the perfect recipe for success right now,” Chanowitz says.

A similar trend is happening at IGI USA, where Weinstein says the lab has seen an increase in demand for its certificates of authenticity–which guarantee that a piece is crafted of precious metals and real diamonds (although the diamonds are not graded)–as well as its certificates of evaluation. The evaluation certificate certifies the authenticity of the metals and states the minimum quality of any diamond found in the piece.

“Nowadays, the major retailers have gotten to the point where they’re saying even for the low price-point items, it’s worth it to have the piece put through IGI,” Weinstein says.

That trend has stretched over to GIA, too, where Moses says over the past couple of years, the biggest growth segment for diamond certificates is for stones that weigh less than 0.75 carats.

“That trend seems to be continuing,” he says, attributing the development to both an increase in the number of customers asking to have smaller goods graded, and the increase in demand GIA is seeing from emerging markets, where smaller stones are the norm.

“I think that is a big business in the developing markets, such as China and India,” Moses says.

Rubies, gold make headlines

While the economic slowdown seems to have put a damper on new diamond treatments, the year was not without a few jewelry-fueled controversies that made headlines.

While these news stories potentially chipped away at consumer confidence, they also gave laboratories a rare chance to explain to the public the science of evaluating gemstones and precious metals.

One such opportunity came by way of lead glass-filled rubies, which were featured in exposés that appeared on at least two widely broadcasted TV news programs in the past several months.

First, in the fall 2009, ABC News’ Good Morning America aired an undercover shopping segment intended to highlight how department store chain Macy’s was selling lead glass-filled rubies without proper disclosure. The segment featured an interview with Smith of AGL, who explained what retailers should disclose, and the precautions that need to be taken with those stones.

A similar story about a handful of West Coast Macy’s stores ran on a local CBS affiliate in San Francisco in February.

Despite these two very public reports, Moses says his lab hasn’t seen an increase in the number of rubies brought in for testing and certification. He says most of the lead glass-filled product ends up in jewelry that is too low-priced to be worth paying fees for lab grading.

Still, lead glass-filled rubies are out there, and Moses advises retailers who are buying lines of inexpensive jewelry to know what they are getting. Specifically, he suggests that jewelers ask their suppliers for a written statement that identifies gemstones and any treatments they underwent. Then, retailers should have two or three pieces tested to see if the supplier’s statement matches up.

“If they don’t, I would return all of it,” he says.

Moses says products such as lead glass-filled rubies have the potential to damage a jeweler’s credibility in an already fragile marketplace.

“I think in some ways that was an unfortunate and short-sighted action by those in that business,” he says. “It’s deceptive and, in many cases, not even wearable.”

AGL’s Smith says reports on glass-filled rubies haven’t sent customers rushing to his lab to demand testing, but the lab has seen a number of stones coming through that have turned out to be lead glass-filled or composite rubies, unbeknownst to the stones’ owners.

“This is an unfortunate trend that seems to only be increasing,” he says.

Smith says a new generation of composite rubies appears to be entering the market. The lab is researching this new material and treatment and plans to present its findings to the industry when the research is complete.

Also stirring up controversy among the consumer set in 2009 was precious metal buyback company Cash4Gold.

Numerous consumers complained about the Pompano Beach, Fla.-based mail-in service, claiming the company, among other things, didn’t pay them a fair price for their gold, prompting a number of consumer-focused news shows to investigate.

The metal-refining mayhem gave the Gem Certification and Assurance Lab (GCAL), led by company president Don Palmieri, the chance to show off its expertise.

Palmieri says a number of popular TV news shows, including Good Morning America, NBC’s Today show and Inside Edition, called on the New York-based lab to perform metal analysis for their stories because of the lab’s advanced XRF equipment, which uses X-rays to assay metals.

The lab’s turn in the spotlight is helping to raise its profile nationwide, but there is a price to pay: staffers’ time. Palmieri said for Inside Edition, three staff members spent two entire workdays testing metals for the show.

“We could be doing other work that brings revenue during that time,  [but] we’re happy to do it,” he says. “To get national publicity for our lab is almost impossible.”

Social hour for labs

One can hardly have a conversation in the jewelry industry without the hot topic of social networking coming up, as jewelers swap ideas about developing a fan page on Facebook or garnering a strong following on micro-blogging site Twitter.

It is only natural that the industry’s grading labs, an integral part of the jewelry supply chain, would start thinking about getting into the social game.

In March, GemEx Systems, a Mequon, Wis.-based lab that focuses on measuring a diamond’s light performance, took a big, bold step when it introduced the GemEx Live Report App, a Facebook application that allows users to show off their diamond’s light performance on Facebook.

GIA, meanwhile, dispenses tidbits on lab happenings through Twitter. Using the name @GIANews, the institute already boasted 180 “followers,” or people subscribed to its feed, at press time.
 
Plans for the lab to expand into the social media space are in the works, says Kathryn Kimmel, vice president and chief marketing officer.

“We are exploring various ideas in this arena, but we have no firm plans in place at this time,” Kimmel says. “We certainly do want to move further into social networking, as resources permit.”

The AGS Lab also is preparing to step into the social networking circuit. Yantzer says the idea of the lab getting onto Facebook came up at a recent board meeting but no firm plans were hatched for how or when.

“We’re going to get on there. I know that,” he says. “To what extent or where we’re headed with that, it’s not my call. It seems you almost have to nowadays.”

Demand for Gold in China to Double Within a Decade

The following article is published courtesy of Israeli Diamond Industry Portal

The demand for gold in China is set to double in terms of tonnage within just ten years according to the latest analysis from the World Gold Council (WGC), which is funded by the world’s leading gold mining companies. Chinese gold consumption was worth more than US$14 billion in 2009, which is equivalent to 11% of global gold demand.

Marcus Grubb, Managing Director, Investment at WGC, said: “Now one of the world’s largest economies, China has already rapidly become a prominent gold market. However, our analysis confirms that significant untapped growth potential exists in the Chinese gold market. In China, if gold demand continues to accelerate and becomes more comparable with other major markets, WGC expects it to double in tonnage terms within the next decade, which would represent annual gold demand of approximately US$29 billion at year end 2009 average prices.”

Over the past five years, demand for gold has increased at an average rate of 13% per annum in China. If gold were consumed in China at the same per capita rate as in India, Hong Kong or Saudi Arabia, annual Chinese demand could increase by 100 to 4,000 tons in the jewelry sector alone finds a recently launched report, Gold in the Year of the Tiger, provides an outlook for all aspects of gold’s supply and demand fundamentals in China.

Diamond Producers Reel from Tough Year

The following article is published courtesy of Israeli Diamond Industry Portal

Authors: Uri Haviv and Iris Hortman

Intellectual property: Israeli Diamond Industry Portal

The passing year has been tough on the diamond industry, which suffered from the global financial crisis and its impact on the luxury goods’ market.

Many jewelry companies declared bankruptcy, while the mining companies’ reaction to the recession was to decrease diamond production and supply rates. The global economy has noted a slight recovery over the past few months, but things are far from steady, and the only certainty these days seem to be the uncertainty surrounding the future.

In early March, RBC Economics Research issued a report suggesting the diamond market has retained its strength in early 2010, even if not quite as it did in the second half of 2009. RBC predicted that the increase noted in rough diamond prices would eventually be curbed to a degree, adding that demands have kept both rough and polished prices relatively steady in February.   

The financial crisis did not leave the world’s diamond giants unscathed: the first half of 2009 saw three of the world’s major diamond explorers – De Beers, Rio Tinto and BHP Billiton – produce only 15 million carats of diamonds, a 60% drop compared to the same period in 2008. Russian diamond giant Alrosa also cut back on production, and sold most of its rough diamond to Moscow’s State Depositary and its diamond stockpile agency, Gokhran.

Nevertheless, the diamond market’s encouraging recovery is reason for an interim review of the four diamond powers’ actions.

De Beers
The world’s largest diamond supplier suffered through a decline in both sales and overall activity over the past year. In a recent press release, De Beers summarized its performance in 2009 and outlined its 2010 projections for both the company and the global diamond market.

De Beers’ data suggested that diamond consumption saw a year-round, single-digit decline; but also noted a slight boost, in the form of improved fourth-quarter sales, strong demands in China and India, good holiday season sales and a 24% increase in sales in the second half of 2009, compared to the year’s first six months.

De Beers introduced a six-step plan for dealing with the financial crisis, cutting production and operational expenditures by 45%, from $2 billion in 2008 to $1.1 billion. The steps taken allowed it to gross $654 million in 2009, despite sales shrinking from $6.89 billion to $3.84 billion.

The diamond giant also had to deal with refinancing a $3 billion loan – $1.5 billion of which was due in the beginning of 2010. Major shareholders the Oppenheimer family, Anglo American and the government of Botswana, eventually refinanced $1 billion.

De Beers’ future projections were cautiously optimistic, saying production, sales and prices will see only a gradual increase in the near future, despite growing consumer demand for diamond jewelry.

Alrosa
Alrosa reached a significant milestone in 2009, becoming the world’s largest diamond producer, with 34.7 million carats of rough diamonds, compared to De Beers’ 24.6 million carats. 

Nevertheless, 2009 was not easy for the Russian diamond giant: July 2009 saw Fyodor Anderyev become CEO instead of Sergei Vybornov, setting a sales goal of $2 billion. The company met its goal, producing a total of $2.34 billion worth of diamonds. However, the majority of Alrosa’s diamonds were sold to the State Depository and not to foreign markets, in a move meant to both support the struggling industry and weather shrinking demands. The fact that Moscow’s State Depository bought Alrosa’s inventory allowed the company to keep up its rough diamond production despite declining demand. Nevertheless, Alrosa did not disclose the revenue from these sales.

Fitch Ratings Agency has recently expressed confidence in Alrosa, upgrading the Russian diamond giant’s credit rating from B to B+, due to a decrease in its financial and operational risk and ahead of expected growth in the global mining industry. Fitch further predicted that Alrosa’s financial performance will improve in 2010 and that its EBITDA earnings (earnings before interest, taxes, depreciation and amortization) will add 20%, due – among other things – to a foreseeable increase in rough diamond prices.

As for future projections, Alrosa has decided to target the Indian market: the company has met with Gems and Jewellery Export Promotion Council representatives in order to boost mutual ties and has further signed a three-year, $490 million, rough diamond supply contract with three of India’s large diamond manufacturers, Rosy Blue, Diamond India Ltd and Retilal Becharlal & Sons.

The Russian diamond giant, which will supply the diamonds according to quarterly-determined prices and demand, hopes to expand its operations in the Indian market. In 2009, Alrosa exported half of its product, some $500 million worth, to India. The company hopes that forging long-term relations with Indian diamond companies will benefit both sides.

Furthermore, Alrosa has been working to reduce its expenditures and is currently renegotiation its credit line, in a move meant to improve company profitability.

Rio Tinto
Mining giant Rio Tinto, which, on top of diamonds, also produces aluminum, copper, iron, gold and coal, has also received a vote of confidence from Fitch, which upgraded the British-Australian miner’s credit rating from BBB+ to A-, following, according to the Sydney Morning Herald, a successful debt reduction. 

Fitch’s research notes that Rio Tinto has made some wise moves in order to cut debt, adding that it was increased demands by the Chinese market that have helped the company emerge from the financial crisis with its core operation relatively unscathed. The report also predicted further improvement in Rio Tinto’s performance in 2010, due – among other things – to $5.8 billion it stands to get as part of a joint, west-Australian venture with BHP Billiton.

According to Mining Weekly, Rio Tinto’s capital expenditure projection for 2010 stand at $6 billion.  CEO Tom Albanese said in a statement that the company will pursue several growth options via careful investments, and that it believes a slight improvement in demand is noticeable. Albanese’s statement further said that the company’s projections for the next few years, based on the urbanization and industrialization of many cities in India and China, were positive.

Rio Tinto responded to the financial crisis like other diamond giants – by cutting production. According to a recent Polished Prices report, the company said the diamond output at the Argyle mine in Australia, which it fully owns, decreased by 33% in the last quarter of 2009.

Despite the improvement in the diamond market in the current quarter, the numbers still suggest a scope of activity lower than its pre-crisis level. Production at the Diavik mine in Canada, of which Rio Tinto owns 60%, was cut by 41% due to the economic slowdown, and in order to maintain price levels ahead of the market’s recovery.

Meanwhile, Rio increased its marketing efforts: in January, the company announced changes in its sales and marketing staff and in February, it opened a Hong Kong office, meant to support clients operating in the emerging Chinese market. The company said it would also continue its sales efforts in the Indian market. 

BHP Billiton
BHP Billiton, the world’s largest mining company, experienced a favorable second half in 2009. In January, the company reported that its diamond and specialty products division grossed $170 million in the six-month period ending on December 31 – a 115.2% improvement from the same time in 2008.

BHP attributed the increase in revenue to an actual increase in diamond prices, continued improvement in operational expenditures and a cut in diamond exploration costs. BHP’s diamond production during this period came to 15.4 million carats (+13%), the majority of which were mined in Canada’s Ekati mine, which noted a 28% increase in production – 760,000 carats. Nevertheless, BHP warned that is was gearing for short-term sale fluctuations, due to the market’s instability.

BHP Billiton is currently dealing with a new taxation bill in Australia, which also stands to affect Rio Tinto: the proposed “rent tax” calls for increasing the levies imposed on mining companies operating in Australia, and may end up costing them billions of dollars in future revenue.

Should the bill mature into legislation, it would cost BHP $2.33 billion annually between 2012 and 2016, while Rio Tinto stands to lose $2.7 billion a year. These projections are very much a thorn in both companies’ side, as they try to remain cautiously optimistic.

Sotheby’s sale to be strong on color, provenance

The following article appears courtesy of National Jeweler Network

Intellectual property of National Jeweler

From the collection of Patricia Kluge, this sapphire and diamond Panthère wristwatch by Cartier will be among the pieces up for the auction at Sotheby's April 20 "Magnificent Jewels" sale. The timepiece is estimated between $100,000 and $150,000. Image courtesy of National Jeweler Network

New York–Sotheby’s will commence its spring jewelry sale in New York with a single-owner auction chronicling a century and a half of jewelry design, followed by a “Magnificent Jewels” auction of important diamond and colored gemstone jewels.

The April 20 event will begin with “Always in Style: 150 Years of Artistic Jewels and Magnificent Jewels,” a comprehensive survey of period and signed jewels. The more than 200 pieces in this single-owner collection range from 19th century micro-mosaic and revival styles to delicate belle epoque and art deco designs, opulent jewels from the 1940s and 1950s, and modern-day creations.

The sale is intended to be a chronology in style, illustrating how jewelry design evolved under the influence of fashion, society and world history, Sotheby’s says. It includes pieces from such makers as Boivin, Cartier, Daniel Brush, Giorgio Facchini, Marcus and Co., Giuliano and T.B. Starr. Estimates for the collection pieces start at $5,000.

Sotheby’s says the major highlight of Magnificent Jewels will be pieces from the collection of Patricia Kluge, including a pair of platinum and diamond pendant-ear clips set with almost 64 carats of pear-shaped diamonds and estimated between $600,000 and $800,000.

Also up from the Kluge collection are fancy-intense yellow diamonds, suites of sapphires and rubies, plus a sapphire and diamond Panthère wristwatch from Cartier circa 1985. The latter piece is estimated between $100,000 and $150,000.

The Magnificent Jewels sale will also include a necklace featuring 42 Gemological Institute of America-certified fancy-vivid yellow diamonds weighing a total of 100.17 carats set in a graduated rivière-style necklace estimated between $2 million and $3 million. Sotheby’s says the piece is believed to be the first necklace set entirely with fancy-vivid yellow diamonds ever to appear at auction.

Colored gemstone offerings include a Tiffany and Co. bracelet, circa 1925, featuring 14 matched Colombian emeralds weighing approximately 39.60 carats (estimated between $350,000 and $550,000); a collection of seven loose Kashmir sapphires (estimated between $1.1 million and $1.5 million) and a ruby and diamond ring set with an 8.66-carat, cushion-shaped Burmese ruby (estimated between $1 million and $1.5 million). The latter stone is property of the Gardner Family and was previously in the collection of Isabella Stewart Gardner, the philanthropist and arts patron.

The sale will also include a number of important colorless diamond designs, including a platinum ring set with a 9.25-carat, D-color, internally flawless stone (estimated between $1 million and $1.5 million); the “Marlene Rose,” a platinum and diamond brooch formerly in the collection of Marlene Dietrich (estimated between $30,000 and $50,000); and a pair of platinum pendant-ear clips from Cartier set with over 30 carats of diamonds (estimated between $75,000 and $100,000).

Highlights for both jewelry sales will be on public exhibition at Sotheby’s Los Angeles March 26 and Sotheby’s Hong Kong April 3-6. Pre-sale exhibitions will be held in New York April 16-20.

DTC March Sight Estimated at $420M

The following article appears courtesy of Rapaport Trade Wire

Intellectual property of Rapaport

The Diamond Trading Company’s (DTC) March sight had an estimated value of $420 million as both prices and assortments remained consistent. Sightholders were satisfied with the DTC boxes, saying that De Beers is currently offering the best value on the market.  One sightholder added that: “The more you see of outside goods, the cheaper DTC looks.”

De Beers pledged during the February sight to keep prices stable in the short term, barring “any further major changes in market conditions.” Sightholders said they expect this stability to last at least until the JCK Las Vegas show in June.

Report: Tanzanite prices on the rise

The following article is published courtesy of National Jeweler

London–Reuters reports that gemstone miner and producer Tanzanite One saw per-carat prices for the purplish-blue gemstone increase an average of 16.5 percent at the recent jewelry show in Hong Kong, compared to prices at the company’s most recent sight, held in Dubai in November.
 
According to the report, Tanzanite One recorded revenues of $1.62 million from the sale of 198,337 carats of rough tanzanite at the recent Hong Kong International Jewellery Show, held earlier this month. Sales to date for the company in 2010 total $2.68 million, according to the report.

Tanzanite One explained that demand for the gemstone exceeded current supply, signaling strength in the tanzanite market.

“We are continuing to develop and explore complementary sales channels outside of formal sight sales, such as this Hong Kong sale,” Chief Executive Director Bernard Olivier said in a statement, according to Reuters.

Mining Directors Testify before Zimbabwe Parliament

The following article is published courtesy of: IDEX online Author: Edon Ophir

The directors of various mining companies working in conjunction with the Zimbabwean government to develop the controversial Marange diamond field appeared Tuesday before the Zimbabwean Parliament’s Committee on Mines, the Voice of America reported Wednesday. The government-controlled mining companies Mbada Diamonds and Canadile Miners took control of the Marange mining area after title holder African Consolidated Resources was driven out by President Robert Mugabe in 2006. The companies’ directors, under the advice of Mines Minister Obert Mpofu, had previously refused to appear before Parliament for several weeks. Robert Mhlanga, representing Mbada, and Corgan Matanhire, representing Canadile, were questioned for more than four hours over Marange deals, such as the attempted auction of 300,000 carats of diamonds in January. The government had canceled the auction after it was discovered that the goods were not certified by the Kimberley Process. The hearing was apparently very heated, according to VOA correspondents reporting from the Parliament, with legislators unhappy over the responses they received and warning the executives they would face charges if they lied. Committee members also expressed concern that neither Mbada nor Canadile had experience in diamond mining, since Mbada is controlled by Reclamation Group, a South African scrap metal and iron dealer.

Alrosa Agrees to Supply Israel with Rough Diamonds

The following article has been published courtesy of Israeli Diamond Industry Portal

Industry, Trade and Labor Minister Binyamin Ben-Eliezer, who is visiting Russia, met Tuesday with officials from Moscow’s diamond giant Alrosa and diamond stockpile agency, Gokhran. 

Joining Minister Ben-Eliezer at the meeting were Knesset Member Anastasia Michaeli, Israeli Ambassador to Russia Anna Azari, Ministry of Industry, Trade and Labor Director-General Sharon Kedmi,  President of the Manufacturers Association of Israel Shraga Brosh, Diamond Controller Shmuel Mordechai, and Boaz Hirsch, Director-General for Foreign Trade at the ministry, who also serves as Chairman of the Kimberley Process.

Also attending were Israel Diamond Exchange President Avi Paz, who was joined by IDE Vice President Yair Sahar, IDE Managing Director Yair Cohen and IDE members Shalom Papir and Yosef Papo; and David De Toledo, Deputy President of the Diamond Manufacturers Association, joined by DMA Honorary President Shlomo Yovel and DME CEO Udi Sheintal.

According to a ministry press release, Minister Ben-Eliezer referred to the Israeli diamond industry as “an export engine” and a major contributor to Israel’s economy.

Minister Ben-Eliezer asked Alrosa’s delegates to establish a direct supply line of rough diamonds to the Israeli diamond industry, amounting to $300 million a year and the diamond giant reportedly agreed in principle.

The ministry’s press release noted that the Israeli diamond industry’s trade amounts to about $10 billion in exports annually, and $4.5 billion in rough diamond imports. 

Alrosa keeps a sales office at the Israel Diamond Exchange, which will continue to head its Israeli operations.

Paz and De Toledo both welcomed the decision, stressing the Israeli diamond industry’s production and trading fortes. The two then reviewed the diamond industry and the Diamond Exchange’s activities. 

“The direct supply of rough diamonds to Israel will bolster the Israeli industry’s standing as a world production center, as well as a trading center,” said IDE Managing Director Yair Cohen. “It will also increase Israeli diamantaires’ financial ability to polish diamonds, thus increasing Israel’s worldwide trading activity.”

Minister Ben-Eliezer invited Alrosa and Gokhran’s presidents to visit Israel.

Alrosa is Russia’s biggest diamond producer and exports some $2 billion worth of diamonds a year. 

Sotheby’s Hong Kong Sale to Include Famed 5.16ct Blue Diamond

The following article is published courtesy of: IDEX online

A 5.16 carat pear shaped fancy vivid blue diamond, pictured above atop a cactus, will be among the most expensive ever sold in Hong Kong

The De Beers Millennium Blue Diamond, a magnificent 5.16-carat pear-shaped internally flawless fancy vivid blue diamond, will be a highlight at the upcoming Magnificent Jewels & Jadeite sale April 7 in Hong Kong. The high estimate of the rare blue diamond is $5.8 million, making it among the most expensive diamonds Sotheby’s has ever sold in Hong Kong.

The sale will offer an array of diamonds, gemstones, jadeite and natural pearls across more than 320 lots, with an estimated total value of more than $47 million.

Sotheby’s has noted two high-valued items expected to be sought-after by collectors. The first is an exceptional jadeite and diamond necklace by Cartier, estimated between $4.9 million and $6.4 million that is made up of 35 jadeite beads of highly translucent vivid emerald green color strung as a single strand and enclosed with a platinum clasp. The clasp is set with circular-cut diamonds.

Another item marked as “highly important” is the diamond rivière necklace. Estimated between $4.1 million and $5.2 million, the straight-line necklace is composed of 50 graduated brilliant-cut diamonds ranging from 1.50 to 6.55 carats, with a total weight of 107.43 carats, mounted in platinum.

Plans by Damas to open 100 stores in India are on standby

The company is presently resolving its financial chaos

Courtesy of: Diamond World

The project of opening 200 retail outfits in India, by Damas, is on standby, and seems almost unlikely to materialise, following the company’s financial situation. As reported by the company, its latest financial statement for the six months to September last year, noted cash balance as Dh135m. The company yet has to reach a formal standstill regarding Dh4 billion it owes to over 20 banks, and a Dh367,000 fine imposed by the Dubai Financial Services Authority (DFSA), which make it almost unlikely for its Indian venture to shape up. The unauthorised transactions by the three Abdullah brothers, who are members of the company’s founding family, led to depletion of the company finances.

Damas and Indian retailer Gitanjali Group have a joint venture with Damas as a 51 percent stakeholder. Gitanjali was to initiate the first 30 Damas-branded stores in its next financial year, which will begin in April 2010, but it has not yet received the initial investment of US$32.9 million (Dh120.8m) from Damas, reports say. The stores were planned to be set up within the next three years and Damas had estimated that the new stores would have represented about 20 per cent of its business.

Reports say that following the financial chaos, the working capital of the company could well lead it to reducing its business. Tawhid Abdullah had earlier disclosed undertaking unauthorised transaction worth Dh600m and had stepped down from his post in the company. Along with his brothers, Tawfique and Tamjid, the three had entered into a formal agreement to repay the company in 18 months, else to return 350 million of their shares.

In addition, the DFSA had served record fines on Damas and the Abdullah brothers, and dissolved the company’s board of directors post a five-month investigation into the unauthorised transactions. A Dh2.57m fine was imposed on the company, which now has to pay Dh367,000 within 30 days, while the remainder fine has been suspended, if it meets the DFSA’s requirements.

The DFSA concluded that the Abdullah brothers had used the bank accounts of Damas for personal use. Amongst the transactions was a Dh294m loan was sanctioned to Dubai Ventures, a unit of Dubai Holding, and was converted into an investment which turned out to be worth only Dh73.5m. The loss led the company to realign and postpone its debt payments, reports add.