By Clara Ferreira-Marques
LONDON, July 20 (Reuters) – First-half profit halved at De
Beers, the world’s largest diamond producer by value, as trade
buyers were held back by a lack of funds and worries over
consumer demand.
The company, soon to be majority owned by miner Anglo
American, faces tough times in the mid-stream – the
section of the diamond market between the mine and the jewellery
store.
It has taken the unusual step of allowing buyers of its
rough diamonds such as cutting and polishing centres – known in
the business as “sightholders” – to defer the purchase of as
much as half their gem allocation until March 2013.
De Beers sells most of its gem-quality rough diamonds
through “sights”, sales usually every five weeks when trade
buyers inspect their allocations of rough diamonds and decide
whether or not to purchase them. They are normally allowed to
defer their allocations only until the next sight.
“Of more importance is the second six months, which has
started very slowly,” analyst Des Kilalea at RBC Capital Markets
said on Friday. “The sightholders will defer as long as they
possibly can – why would you buy rough to start polishing unless
you thought you were going to sell?”
Major Indian cutting and polishing centres are facing the
impact of a weak rupee, while others struggle to raise finance
to fund trade as banks rein in lending.
“Money available for lending is getting scarcer and
scarcer… Prices increased quite a bit last year, therefore it
is difficult for the pipeline to finance the carats they need,”
De Beers Chief Executive Philippe Mellier told reporters.
Continued…
