Diamond miner De Beers ended the first quarter on a high note, reporting the largest diamond sale volumes since at least the start of 2016 as it began slashing its massive Indian stockpiles.
The company said that it sold 14.4 million carats in the first three months of the year and mined 7.4 million carats while cutting stocks by 6.7 million carats. De Beers' first three sales of 2017 generated $1.86 billion, but Barclays analysts are concerned that the current market environment may not be sustainable, especially considering that No. 2 diamond miner Alrosa also reported a 17 percent jump in sales in the first quarter to 12.1 million carats. According to sources, De Beers is also cutting on the amount of gems its roughly 80 clients are allowed to buy at its annual offerings.
De Beers' inventories started expanding rapidly last year after the Indian government decided to remove from circulation 500 rupee and 1,000 rupee banknotes to fight corruption, dealing a blow to local polishers and traders who typically use cash to purchase cheaper diamonds and prompting De Beers to revise its rules surrounding the purchase of cheaper and lower-quality stones, allowing clients to turn them down.
Photo: Iconic De Beers Building, Ginza District, Tokyo © Jane Rix / Shutterstock