Prices drop as diamond bank closes

Rough diamond prices are declining this year as KBC Groep winds down its Antwerp Diamond Bank unit, crimping margins for traders, according to Gem Diamonds, which has mines in Lesotho and Botswana. “There’s been some liquidity issues in the diamond arena with the closing of the Antwerp Diamond Bank, which was a major financier,” chief executive Clifford Elphick said on Tuesday. “The net effect is that it has spooked the market a little bit.” Rough diamond prices fell 6.9% in the last three months of 2014, the steepest drop since the second quarter of 2012, according to data from UK-based WWW International Diamond Consultants. That comes after the stones had previously resisted the slump in other commodities from oil to iron ore, with prices advancing about 30% in the past five years. Elphick said analysts were projecting price declines of 5% to 10% this year. The company, which operates the Ghaghoo mine in Botswana, said it recovered 25 525 carats of diamonds at Letseng mine in Lesotho in the three months to December, down from 28 365 carats in the preceding quarter. Gem Diamonds achieved an average value of US$2 140 (N$24 471) per carat sold in the fourth quarter, down from an average value of US$2 603 (N$30 194.80) in the previous quarter. Its December Letseng tender achieved an average of US$2 799 (N$32 468.40) per carat, the company said. Gem Diamonds received US$2 540 (N$29 464) a carat in 2014, 24% higher than the previous year after gains in the first half, the company said yesterday. “The general feeling in the market is for a slight weakness” this year, Elphick said. “Price falls strike me as a bit overdone but we’ll soon know.” JOHANNESBURG BLOOMBERG/REUTERS