Indian Cash Crunch Slows De Beers Sales

De Beers sortingGaborone: De Beers revenue from rough diamonds declined sequentially to $418 million in the final sales cycle of the year as tighter liquidity in India hit demand for lower-priced stones.

Sales fell 12 percent at last week’s December sight from $476 million in November, the miner reported. They were 69 percent higher than the $248 million recorded a year ago, when demand in the rough market had slumped.

Demand for smaller rough has slumped since the Indian government invalidated INR 500 and INR 1,000 currency notes last month, drying up activity in sections of the cash-focused diamond trade almost overnight. The country accounts for a vast majority of global diamond manufacturing.

The company allowed sightholders to defer their allocations of diamonds costing under about $100 per carat in response to the recent developments in India.

Even so, demand for larger and more expensive stones was stable and prices were unchanged, sightholders said. Premiums on the secondary market are in the lower single-digit percentages, they added.

“While the trade in lower-value rough diamonds is experiencing a temporary slowdown as a result of demonetization in India, demand across the rest of the product mix continued to be healthy, and overall sales remained in line with seasonal expectations,” said Bruce Cleaver, De Beers chief executive officer.