Amish Shah is the third generation of his family to work in the diamond business. But the first to sell stones grown in a laboratory rather than dug out of mines in far-flung corners of the world — a process that threatens to shake up the $80bn diamond jewellery market built on notions of love and marriage.
Much of the focus around Indian mining tycoon Anil Agarwal’s pursuit of Anglo American Plc has been the company’s South African operations. But Botswana could be similarly important.
Botswana is the source of about two-thirds of Anglo’s diamonds and the country is a major stakeholder in De Beers, the world’s biggest gem producer. There are few countries as dependent on a single commodity as Botswana is with diamonds and the nation is highly protective of the industry.
CALGARY — The Washington Companies has won over the board of Dominion Diamond Corp., one of the world’s largest diamond producers, with a sweetened US$1.2-billion bid.
The privately held Montana firm is offering US$14.25 in cash per share for all stock in Dominion Diamond (TSX:DDC), up from its US$13.50 per share offer that Dominion rejected in March.
“We’re going to be in Canada for a very long time and this was a nice addition to our portfolio,” Lawrence Simkins, president of Washington Cos., said in a phone interview.
An ugly year for diamonds in the vital U.S. market is piling pressure on Europe’s historic center of the $80 billion global trade.
Diamond trading companies in the Belgian port city of Antwerp, which has been the industry’s trading capital for five centuries, were already feeling the pinch from a tightening credit bubble and thin margins. That’s now being compounded by falling demand from some of the industry’s biggest customers, notably retailers Signet Jewelers Ltd. and Tiffany & Co.
In the diamond industry, the only place that really matters is the U.S., and the market is starting to look a little shaky.
In a country where consumers buy almost half the world’s gems, Tiffany & Co. and Signet Jewelers Ltd. this week reported disappointing sales. That’s a blow to expectations that President Donald Trump’s pro-business policies would give consumers more money to spend on luxury items such as diamonds.
The diamond industry’s most famous chart is the hungry crocodile, the ancient reptile’s jaws wide open, reflecting both a predicted shortage of gems and the inevitable price rises that will come with it.
Rough price forecasts are a key input into modelling diamond mining cash flows. Gemdax discusses the divergent price trends of different rough diamond productions at the Natural Resources Forum.
Watch the talk – http://naturalresourcesforum.com/companies/gemdax/
The recovery in diamond prices is leaving out the smallest and lowest-quality gems. For the smallest diamonds, prices are down 15 percent this year, data compiled by Bloomberg show. That compares with an average 7 percent increase for all stones.