| Demand growth for rough diamonds to be lower: Varda Shine | |
| Dilip Kumar Jha / Mumbai Feb 18, 2012, 00:08 | | | | | |
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The Diamond Trading Company (DTC), marketing arm of De Beers, the world’s largest diamond miner, forecasts a slower growth in demand this year, against double-digit growth last year. Varda Shine, its chief executive officer, tells Dilip Kumar Jha this would again be driven by demand from developing economies, led by India and China. Edited excerpts:
Is there any change in the selection of sightholders (DTC’s authorised bulk purchasers of rough diamonds) for India?
The preliminary ‘Suppliers of Choice’ list’, or sightholders, for 2012 to 2015 includes 26 companies from India of 72 from across the world. This is comparable to the previous selection, with a similar global number. However, we should not judge diamantaires from the origin of the company. There would be many more Indian firms based in other centres like Antwerp, Belgium, Dubai, Namibia and South Africa, etc. We are now going for verification and other procedural issues for final selection.
2011 was very volatile for the diamond industry. What is your forecast for 2012?
Well, the first half of 2011 was not so encouraging. The first quarter of the current year is expected to remain a bit quiet. Business would start coming back from the second quarter. The full year, therefore, is likely to close on a strong note. Thus, polished diamond prices are expected to remain higher in comparison with the level in the beginning. This, however, will have a slow start, ending with a solid year. We hope 2012 would not repeat the volatility the industry witnessed last year.
What is your price forecast for the current year ?
Unlike in 2010 and 2011, in which rough diamond prices shot up by 27 per cent and 29 per cent, respectively, the precious stone is estimated to rise in single-digits. Rough diamond prices were driven largely by robust demand from India and China in the previous two years. Demand is expected to be slower this year, due to high prices of precious stones and metals. This year, again, the developing economies, led by India and China, are expected to remain the major driver of demand.
Do you anticipate rough diamond demand to outstrip supply, leading to a price rise?
Despite De Beers producing 35 per cent of world supply, it announced no increase in rough production this year from the level of 15.5 million carats last year. Other producers are going to continue raising production. Hence, from the roughs perspective, supply is likely to remain sufficient. We will continue to prioritise waste-stripping and maintenance backlogs. We are making sure our mines should be well positioned to produce more when actual demand emerges. So, if the demand of roughs increases, we would certainly raise production.
De Beers helped Botswana become a major trading hubs despite no local consumption. How can India gain that status?
Currently, India is a diamond trading hub, without doubt. The country has all diamantaires. Obviously, Botswana is the biggest producer in the world and De Beers is still negotiating an agreement to help excavate Botswana’s resources for the next 10 years. As part of that, DTC is going to relocate from London to Botswana, which will help the latter increase the percentage of supply. But, I do not think anyone can take India’s leadership position in the overall trade.
Any demand forecast for the Indian market ?
Indian market grew in double digits last year. For current year, a clear picture will emerge by middle of next month. But, overall scenario is currently robust.
Is the recovery in the US market good news for DTC ?
Hoping for a rebound, we laun-ched the ‘Forevermark’ brand last year in the US, which constitutes 40 per cent of world jewellery sales. Our marketing efforts are going to continue this year as well. During Christmas, jewellery sales rose five to seven per cent. But, over the years, we expect the market to perform better.
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