https://www.miningweekly.com
Africa|Business|Diamonds|Efficiency|Health|Mining|Projects|Safety|Operations
Africa|Business|Diamonds|Efficiency|Health|Mining|Projects|Safety|Operations
africa|business|diamonds|efficiency|health|mining|projects|safety|operations

Diamond market’s sparkle returns

TWINKLE TWINKLE 
Diamond demand has bounced back better than expected

TWINKLE TWINKLE Diamond demand has bounced back better than expected

18th June 2021

By: Darren Parker

Creamer Media Contributing Editor Online

     

Font size: - +

Diamond demand bounced back stronger than expected in the fourth quarter of 2020, says diamond producer De Beers senior sales manager for South Africa Richard Steenkamp.

“Much of this recovery is attributed to the key holiday selling season for diamond jewellery, which outperformed the expectations of market analysts,” he says, adding that the recovery was largely driven by China and the US recovering well, from a consumer perspective, at retail level.

According to a diamond market report, issued by market research firm Bain & Company in February, the diamond industry suffered during the height of the Covid-19 pandemic, but the $64-billion diamond jewellery retail market fared better than the personal luxury market overall – which contracted by about 22%.

Nonetheless, revenues decreased by between 15% and 33% across the value chain, while operating margins also declined by between 1% and 22%.

Steenkamp tells Mining Weekly that, at the start of the pandemic in April last year, expectations for 2020 were far more pessimistic. Lockdowns, travel restrictions and economic uncertainty contributed to lower diamond jewellery sales, which saw a global decrease of about 15% in 2020, but most of the decline happened in the first and second quarters.

Further, despite many job losses or reduced incomes globally, diamond gifting seemed to remain extremely important to consumers as a key element of marriage, engagement and gifting.

“In such difficult times, gifting becomes more prominent – especially when people can’t see each other. Moreover, diamonds have a high emotional value attached to them, and we are uniquely positioned to provide consumers with that connection and joy,” Steenkamp explains.

A customer sentiment survey issued by Bain & Company last year noted that US consumers ranked jewellery and watches among the top four gifts they would like to receive, while Chinese and Indian consumers ranked them in the top two. Up to 80% of consumers said that they intended to spend the same amount or more on diamond jewellery after the pandemic as they would have before the outbreak.

Steenkamp also notes that the increased uptake of e-commerce capabilities globally served to reinforce retail sales that would otherwise have suffered far worse under lockdowns and reduced travel.

Despite the globalisation that e-commerce affords, Covid-19-related travel restrictions meant that most jewellery consumption in 2020 was localised – China most of all.

“Because Chinese consumers had limited opportunities to travel, they turned to local retailers and duty-free stores for luxury and premium purchases,” Steenkamp says.

Bain & Company said that, in China, major local chains had reported double- digit growth in sales in the second half of last year. Further, major retailers were expanding their retail footprints, particularly into lower-tier cities where the middle class and wealth are growing.

Steenkamp believes that the increase in localised expenditure will subside in the long term; however, new consumers in lower-tier cities will provide continued demand for jewellery and drive further growth in China.

Imperative Support

“Despite the improvements in the market, we should remain vigilant in the fight against Covid-19,” Steenkamp notes, adding that De Beers is cautiously optimistic, that the measures it (and diamond producers) has put in place will protect the industry and production pipeline as much as possible.

“The measures put in place last year have laid a solid foundation for the continuation of the positive momentum,” he says, pointing to four strategic imperatives that have served to anchor De Beers amid the Covid-19 tumult.

The first imperative is to protect employees from Covid-19, which included the implementation of stringent and extensive companywide safety, health and hygiene measures – from mining operations to corporate offices.

Moreover, as a subsidiary of mining major Anglo American, De Beers participated in the roll-out of Anglo’s extensive health awareness and broader support programme, called WeCare, which is designed to help protect the health and wellbeing of employees, contractors and host communities.

Prioritising support for host commu- nities and countries is the second imperative, resulting, for example, in De Beers and its joint ventures delivering support totalling in excess of $10-million to support national health and economic responses in these countries.

Carefully managing all aspects of the business under its control comprises the third imperative.

“We went into 2020 with a very strong balance sheet, which enabled us to respond much quicker and support our partners while continuing to invest in key strategic initiatives,” Steenkamp explains, adding that this gave the company the agility to take swift, decisive short-term actions to preserve cash.

“This included a comprehensive review of all operating and capital costs across the business, which included deferring noncritical projects while focusing on increasing the efficiency of critical capital projects,” he adds.

The fourth imperative entails supporting customers throughout the pandemic. “We offered our customers significant flexibility during the worst of the lockdown, allowing them to defer 100% of the delivery schedule.”

He adds that the company also set up a series of webinars and podcasts with senior De Beers leaders in every part of the value chain to provide insights, advice and support for customers.

“These four imperatives that we’ve put in place position us well to continue supporting the sustained recovery of the diamond industry,” Steenkamp concludes.

Edited by Nadine James
Features Deputy Editor

Comments

Showroom

Booyco Electronics
Booyco Electronics

Booyco Electronics, South African pioneer of Proximity Detection Systems, offers safety solutions for underground and surface mining, quarrying,...

VISIT SHOWROOM 
Willard
Willard

Rooted in the hearts of South Africans, combining technology and a quest for perfection to bring you a battery of peerless standing. Willard...

VISIT SHOWROOM 

Latest Multimedia

sponsored by

Hyphen, Eva mine, ferrochrome price make headlines
Hyphen, Eva mine, ferrochrome price make headlines
27th March 2024
Resources Watch
Resources Watch
27th March 2024

Option 1 (equivalent of R125 a month):

Receive a weekly copy of Creamer Media's Engineering News & Mining Weekly magazine
(print copy for those in South Africa and e-magazine for those outside of South Africa)
Receive daily email newsletters
Access to full search results
Access archive of magazine back copies
Access to Projects in Progress
Access to ONE Research Report of your choice in PDF format

Option 2 (equivalent of R375 a month):

All benefits from Option 1
PLUS
Access to Creamer Media's Research Channel Africa for ALL Research Reports, in PDF format, on various industrial and mining sectors including Electricity; Water; Energy Transition; Hydrogen; Roads, Rail and Ports; Coal; Gold; Platinum; Battery Metals; etc.

Already a subscriber?

Forgotten your password?

MAGAZINE & ONLINE

SUBSCRIBE

RESEARCH CHANNEL AFRICA

SUBSCRIBE

CORPORATE PACKAGES

CLICK FOR A QUOTATION







sq:0.123 0.159s - 95pq - 2rq
Subscribe Now