Diamond mines overflow as virus hits global sales
In one of the world’s biggest diamond vaults, hidden inside a nondescript office compound on the dusty outskirts of Botswana’s capital, the precious stones just keep piling up.
Owner De Beers, which mines and auctions most of its gems in the southern African nation, has barely sold any rough diamonds since February. Neither has Russian rival Alrosa PJSC.
Now, as the coronavirus restrictions that froze the global industry for months begin to lift, the unsold diamonds present a dilemma: how to reduce billions of dollars’ worth of stocks without undermining the nascent recovery.
The pandemic has devastated the diamond world. Jewelry stores closed their doors, India’s cutting and polishing artisans were forced to stay home and De Beers had to cancel its March sale because buyers couldn’t travel to view the merchandise.
De Beers and Alrosa have moved to defend their market. The miners refused to cut prices, instead allowing buyers unprecedented freedom to renege on contracts to buy stones.
They’ve also reduced production in an effort to control stock levels. Yet the diamonds keep piling up.
The five biggest producers are probably sitting on excess inventories worth about $3.5 billion, according to Gemdax, a specialist advisory firm. The figure could reach $4.5 billion by the end of the year,.