Gujrat floods, rates and wars damp diamond demand: De Beers

DE BEERS, the worlds largest diamond company, said high interest rates, conflict in the Middle East and floods in India are damping demand for uncut gems in the second half of this year. According to De Beers Managing Director Gareth Penny the main business of De Beers is centred on interest rates, floods in Indias Gujarat have �slowed down� the countrys diamond industry.

Interest rates climbed in at least 25 countries since June and higher diamond prices sapped appetite for luxury goods, leaving gem cutters with bloated stocks and weakening demand for De Beers rough stones. That was compounded by floods last month in Gujarat, closing the worlds largest cutting centre for two weeks and reducing regional diamond exports by almost $1 billion.
De Beers said on July 28 that first-half sales rose 1% to $3.25 billion. Last year, sales reached a record $6.54 billion.

According to the report, De Beers estimates the debt among the worlds diamond cutters is between $11 billion and $12 billion. Growth in demand for diamond jewellery in India and China is currently balanced. De Beers will spend as much as $120 million this year prospecting for new deposits. Its geologists are exploring in Canada, Angola, Namibia, India, Botswana, South Africa, the Democratic Republic of the Congo and soon also in Russia, after the company today struck a partnership with the countrys diamond monopoly Alrosa.