News24
15 Aug 2019, 04:14 GMT+10
De Beers will let buyers reject more diamonds at a sale next week as the mining company shows almost unprecedented flexibility to ease a growing crisis.
The Anglo American unit has told customers they can refuse to buy half of the stones offered that are smaller than three-quarters of a carat, according to people familiar with the situation, who asked not to be identified as the matter is private. Buyers will also get the option to sell back some diamonds to De Beers on favourable terms, the people said.
De Beers's greater flexibility comes as high stocks of polished gems and a tightening of bank financing cuts margins for polishers, traders and cutters, with many saying they can't make money on rough diamonds sold by the company. At the same time, demand for diamond jewellery is stagnant.
"De Beers is working harder to offer its customers flexibility to try to tackle short-term issues," said Anish Aggarwal, a partner at specialist diamond advisory firm Gemdax. "But in the longer term, it's about aligning the rough situation with polished demand."
READ: Anglo to build a new diamond-mining boat in next growth move
De Beers sells its gems through 10 sales each year in Botswana's capital, Gaborone, and the buyers - known as sight holders - have to accept the price and the quantities they're offered. The sight holders are given a black and yellow box containing plastic bags filled with stones, with the number of boxes and quality of diamonds depending on what the buyer and De Beers agreed in an annual allocation.
This year, buyers have grown increasingly frustrated with the cost of rough diamonds sold by De Beers as the prices of polished gems slumped. The company's first-half profit dropped about 30% as sales declined.
De Beers has responded by letting sight holders lower their annual quotas and defer purchases. Chief Executive Officer Bruce Cleaver said last month that he accepts it's not an easy time for clients, but that the company sees no structural problems in the industry.
In the sale next week, De Beers will let so-called buybacks increase to 20%, the people said, meaning sight holders can remove up to a fifth of the diamonds in a box and De Beers will lower the price by a similar amount. The measure could allow buyers to increase profits since the rejected stones tend to offer the slimmest margins.
An oversupply of smaller stones at the bottom end of the market has led to the collapse in the value of many smaller diamond producers.
Get a daily dose of Argentina Star news through our daily email, its complimentary and keeps you fully up to date with world and business news as well.
Publish news of your business, community or sports group, personnel appointments, major event and more by submitting a news release to Argentina Star.
More InformationGENEVA, Switzerland - In the wake of recent protests in Iran, the top United Nations human rights official expressed alarm ...
DELHI, India - Dozens of people have died in a fire in a large factory in Delhi.Fire engines streamed through ...
WASHINGTON, DC - The U.S. Department of Justice last week joined with the U.S. Department of State and the United ...
I have already written a short critique of the majority ruling, and here I wish to expand some of its ...
WASHINGTON, DC - U.S. investigators are trying to determine what caused a Saudi air force pilot in the United States ...
TEHRAN (Tasnim) - China Friday said it had taken 'reciprocal' measures against US diplomats in the country, who will have ...
SYDNEY, Australia - Stocks across Asia rose on Monday in a positive start to the week.Gains however were modest.The British ...
TEHRAN (Tasnim) - China Friday said it had taken 'reciprocal' measures against US diplomats in the country, who will have ...
Five people were killed, 18 were injured and several more were left stranded after an island volcano popular with tourists ...
New Delhi [India], Dec 9 (ANI): The government has a well-thought-out agenda for reforms to beat current slowdown in the ...
Mumbai (Maharashtra) [India], Dec 9 (ANI): Equity benchmark indices ended on Monday with marginal gains after a volatile session on ...
New York [USA], Dec 9 (ANI): Despite global progress in tackling poverty, hunger and disease, a new generation of inequalities ...