JOHANNESBURG (miningweekly.com) - Messages of encouragement for the uncertain times ahead were the order of the day at the start of the Diamond Trading Company (DTC) yearly sight meeting, which started in London on Tuesday.

De Beers Group chairperson Nicky Oppenheimer acknowledged the difficulty of the times and reminded attendees of the resilience the industry has shown in the past during challenging periods.

“Our industry has survived previous downturns, including the Great Depression. However long the recovery may take to arrive, recoveries will inevitably follow a downturn. The industry only survived because we were willing to be courageous in the face of those uncertainties,” Oppenheimer emphasised.

“Make no mistake, the near-term will be difficult,” De Beers Group MD Gareth Penny reiterated.

“Nobody knows how long the recession will last or how deep it will go.  But it will be difficult for nearly every industry the world over, and, if given the choice, I know what product and which partners I’d bet on for the long-term. Level-headed leadership gleaned from generations of experience, treating Mother Nature’s natural treasure as it deserves to be treated, and taking bold action in the short-term with unflinching confidence in the long-term, will help define diamonds for years to come and will see us through this crisis and leave us standing stronger for the future,” Penny added.

DTC MD Varda Shine said that the company would continue to actively promote the equity of the product that it sold. 

“We will take a long-term view when making decisions on our strategy, in the context of prevailing consumer demand, stock and liquidity challenges. We will continue to drive demand by investing in the highly regarded generic marketing campaign in the US that highlights the enduring value of diamonds,” she said.

The DTC is part of the De Beers family of companies, and is the world’s largest distributor of rough diamonds. The DTC sorts, values and sells about 40% (by value) of all the uncut diamonds in the world through its offices in London and Kimberley, and at its government joint venture operations in Botswana and Namibia.

Meanwhile, the company’s mining operations faced significant pressures.

Earlier in January, De Beers Consolidated Mines (DBCM) said it had begun a consultation process with union representatives regarding possible retrenchments.

DBCM said that it would be issuing a Section 189 notice and that it would start a full consultation process with the unions and employees. The number of employees that would be affected was not yet certain.

'DARK CLOUDS'

In a research note published on Tuesday, titled 'Dark clouds hang over diamonds', RBC Capital markets analyst Des Kilalea indicated that he expects the global diamond market will deteriorate further before showing signs of recovery.

He pointed to "disappointing" Christmas sales of diamond jewellery and forecasts that slowing retail demand will ripple back to miners of the precious stones in the form of lower demand and prices

"The chill of global recession is going to become increasingly evident in the form of accelerating job losses...people don't rush out to buy luxury goods in a recession," said Kilalea.

He expects prices will remain soft until jewellery demand bottoms out and global liquidity improves.

However, looking beyond that, Kilalea points out that a foundation is being laid for a strong recovery in prices, as producers "brutally" cut back output.

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