De Beers to borrow $500 million, shut down mines as demand declines

De Beers, the world's largest diamond company, plans to borrow $500 million from Anglo American Plc and other shareholders to "withstand any shocks" after gem demand fell more than 50%. Jewelry sales are plunging as the global slowdown forces even the wealthiest consumers to curb spending on luxury goods. Tiffany & Co said last month holiday sales declined 21%. Brock Salier, a mining analyst at Ambrian Partners estimates diamond prices fell at least 50% in "recent" months and demand declined even more. Chaim Even-Zohar, principal at industry consultant Tacy Ltd forecasts a 22% decline in North America and a plunge of as much as 63% in rough-diamond demand.

- Meanwhile, to curtail supply in an environment of collapsing demand, they are also shutting down the world's largest diamond mines : Debswana Diamond Co., a venture between De Beers and Botswana that runs the world's biggest diamond mines, will shut down all of its mines from at least Feb. 25 until April 14. The company plans to cut 580 jobs at those operations and redeploy them elsewhere in the company.

I have been following the diamond story arc for some time now (that was a post from Aug 2003). It was interesting to watch the intersection of high technology and old-fashioned cartels and to wonder how the industry might be affected by artificial man-made diamonds. In the end it was the global economic collapse and disintegration that is doing them in. So it's not just cars, TV's and tar sands operations that are cutting down on production.

And now, this 50% collapse in diamond demand is serving as an economic indicator in the high-end luxury goods sector. In the meantime, while diamond prices are falling 50%, gold prices are up 50%. So, while a diamond is not necessarily forever, gold remains the true store of value.

Post a Comment:

Comments are closed for this entry.

« George Soros : world... | Main | Singapore inflation... »

Most popular blog postings on lowem.log :

1. Singapore MRT rail network length to double by 2020
2. 2010 Nissan Leaf electric car specifications : 107hp, 24KWh lithium-ion batteries, 100-mile range
3. Live spot gold price quotes chart on COMEX
4. 2010 Toyota Prius specifications released : 50 mpg, 1.8L, 134hp, Ni-MH, solar roof option
5. AVG Anti-Virus Free Edition 2011 direct download link
6. Real-time live gold and silver price quotes chart on COMEX
7. Singapore electric vehicles : Government agencies EMA and LTA to study EV introduction
8. Book review : Shut Down by William Flynn

Featured articles on lowem.log :

1. Book review : Shut Down by William Flynn
2. Singapore electric cars testing starts with 9 electric vehicles
3. Honda, GS Yuasa JV to make lithium-ion batteries for 2010/2011 Honda Civic Hybrid
4. 2010 Honda Civic Hybrid preliminary specifications released
5. 2010 Honda CR-Z hybrid, 2010 Honda Fit/Jazz hybrid models confirmed
6. 2010 Toyota Prius specifications released : 50 mpg, 1.8L, 134hp, Ni-MH, solar roof option
7. NYMEX crude oil recovers from $32.40 low after 2.2 mbpd OPEC production cut announced
8. Singapore : Nuclear power not ruled out