ABN AMRO cuts funding for new rough purchase; sends letter stating the same to the diamond trade
There has been the issue of lack of profitability within the industry, in the midstream pipeline. As expected, ABN AMRO has decided to not finance the diamond trade when it comes to new rough purchase. In a letter sent by the bank yesterday to traders, it stated that profitability in a business is important and clients should not acquire roughs for the sake of holding on to existing allocations with the mining companies or just hold on to the roughs anticipating for better times.
The bank stated that, currently, there is no profitability in the market and the situation has not changed for sometime now. The bank urged the industry to consider purchasing rough if and only if there is sufficient profitability.
Given the current scheme of things where liquidity is already an issue, this may be another blow and the industry will definitely experience the impact. Although, at large, in the long term, the industry believes that this is a good move and will help nurture SMEs and MSMEs.