A New Diamond Deal, Nearly
Well, apparently, they finally did it. De Beers and the Government of Botswana announced Monday morning that they’ve concluded their very prolonged negotiations for an agreement that will govern how Botswana’s rough diamond production is distributed over the next decade.
There are so many stories to write about this topic. The most curious question remains what exactly caused the negotiations to stall? Perhaps that will come to light once the new diamond deal is actually signed and the terms have been revealed.
As a side note, a friend in the industry pointed out, why not just sign the deal and make the announcement? Who announces an end to negotiations? And, is the government really subject to regulatory approval? This saga may not be over after all.
For now, though, we’ll give them the benefit of the doubt.
Either way, we still only have the initial agreement of principles that was signed in June 2023 to understand the framework of the deal. I have no doubt much has changed in the final draft, although I’d imagine those principles remain core to the agreement.
So on seeing the announcement at 8am on a Monday morning, my gears started turning. I pulled the comb out of my left sock, ran it through my hairs – yes, plural, I do have more than two left! trust me, I keep count – set the camera rolling and gave my two-cents worth about the De Beers-Botswana relationship and why this deal matters.
Here’s the resulting video analysis: De Beers, Botswana Conclude Diamond Talks
Without spoiling the punchline, the deal has ramifications not only for Botswana and De Beers, but for the broader diamond industry as well. It will shape the way rough diamonds are distributed to the trade in the years to come and will influence Botswana’s economic development. Hence all the speculation.
Shew, what a way to start the week.
Now, let’s get to the other Pressing Matters you should be aware of:
>>> There has been a major buildup of rough inventory by mining companies in 2024. But the majors have borne the brunt of that burden. The mid-tier and junior miners, which have relatively low production, have managed to sell most of their output, as several reported recently:
Gem Diamonds sold 109,967 carats in 2024, having recovered 105,012 carats. The company had some left-over inventory from the previous year to make up the difference. Its average price rose 4% to $1,334 per carat.
Mountain Province Diamonds sold 2.7 million carats during the year from production of 2.3 million carats and some inventory. Its average price fell 20% to $72 per carat.
Petra Diamonds sold 1.3 million carats of the 1.4 million carats it produced in the second half of calendar 2024. The average price slid 1% to an estimated $112 per carat during the six months, while like-for-like prices were down 10%.
A few observations
It’s easier to move fewer diamonds than large stockpiles in a weak market.
These companies sell via rough tenders or auctions, so their valuations are typically lower than those of the majors such as De Beers and Alrosa, which typically sell at a premium via long-term contracts.
They also have greater flexibility to accept lower prices.
The higher the value the stronger the sale. Gem Diamonds’ high value Letšeng mine saw price gains whereas the market for smaller and lower value rough was weaker, as evident in the decline at Mountain Province’s Gahcho Kué mine.
>>> LVMH reported disappointing watch and jewelry sales in 2024, although the business unit registered growth in the fourth quarter.
The results:
Full year –– Revenue from LVMH’s watches and jewelry business fell 3% to EUR 10.58 billion ($10.96 billion) in 2024. Profit from the unit dropped 28% to EUR 1.55 billion ($1.6 billion).
Fourth quarter –– Sales grew 3% year over year to EUR 3.04 billion ($3.12billion).
Why it matters…
LVMH ranks as the second largest seller of watches and jewelry by value, behind Richemont. It sells through its flagship high jewelry maisons Bulgari, Chaumet, Fred, and Tiffany & Co., along with several watch names.
Those banners along with the Richemont brands – Buccellati, Cartier, Van Cleef & Arpels, and Vhernier – are the strongest indicators of the high-end jewelry market that we have access to, given they’re part of listed companies that must make their results available to the public.
Behind the numbers
Once again, China proved to be the drag on the company. While LVMH did not provide a breakdown of jewelry sales by region, it noted that Asia accounted for 29% of the total for the full year, down from 34% the previous year. Sales in Asia fell an estimated 17%, by my calculations, while those in the US grew 1%, in France they jumped 62%, and in Japan by 15%.
Worth noting
Both Richemont and LVMH were quite upbeat about Japan.
Tiffany & Co. saw record revenue at its recently renovated flagship store, The Landmark, on New York’s Fifth Avenue.
Bulgari gained market share driven by strong sales in high jewelry and luxury watches.
From the blog
>>> As we ushered in the ‘Year of the Snake’ during last week’s Lunar Festival, I examined The Diamond Market’s China Challenge.
>>> Also, check out my Reel on the Chinese market.
>>> Here’s my video analysis on The Unusual State of the Rough Diamond Market.
Coming up
De Beers CEO Al Cook at Investing in African Mining Indaba: February 4
Pandora annual report: February 5
Anglo American / De Beers 4Q production report: February 6
AGTA Gem Fair: February 3 to 8
Melee the Show: February 3 to 8
Gem And Jewelry Exchange: February 3 to 8
Pic of the week

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