Canadian Diamond Market Signed Agreement with De Beers
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Canadian Diamond Market Mirrors Dropped Diamond Demand

1990: Canadian Diamond Market Is Open to Worldwide Diamond Investors

April 1999

De Beers announced that it will buy 35% of the production from the Ekati mine, the largest of the new Canadian diamond mines. Ekati is controlled by the Broken Hill Proprietary Co. (BHP) and Dia Met Minerals and is quite a catch for De Beers. With a recent sale price of $120 per carat and a projected full production of 4 million carats annually by the end of next year, Ekati will account for 8.5% of total diamond production world-wide. The agreement is expected to come into effect mid-1999 and will run for a three year period.

The agreement with BHP and Dia Met could not have come at a better time for De Beers. With a disastrous year in 1998, complete with a drop in sales of $3.3 billion leading to a year end 40% drop in earnings and a decrease in dividends by 22%, De Beers was certainly feeling the effects of the 1998 Asian market massacre and the soft diamond market world-wide. Since the beginning of 1999, though, things are looking up for De Beers and for the diamond industry in general. De Beers’ first two sights had excellent results – a rise of 32% from the previous year’s period – but the Company is, understandably, playing that success down. "While the first two sights of the year have been higher than those of 1998, the recovery at this stage is too recent to justify confidence that the market is over its difficulties," read the most recent report.

On the negative side, Argyle declined to renew with the CSO in ‘96 and now the Namibian government may pull 10% of its production. A new bill is currently being debated in the country’s parliament that may force 10% of all production to be sold on the open market rather than through the CSO. Though the overwhelming share of production from the country comes from the joint company Namdeb, the new laws are worded to force all producers to sell the percentage away from the CSO.

Namibia’s government wants to "test the market," as Venston Malongo of the Namibian Ministry said. While the bill makes a certain amount of sense – certainly the government should want the highest price for its goods – it may prove to be a case of throwing the baby out with the proverbial bath water. In removing its production from the CSO, even only 10% of it, in these days of such a soft diamond market the plan does not seem sound. Another aspect of the bill looks for part of the rough production to be sold to local cutters, so as to create an industry in Namibia.


(Wholesale Diamond & Certificated Diamond in


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