Diamonds30 Mar 2023 08:59
From MAFL's interims [some willa gree]
'An investment which has yet to meet our expectations has been our foray into diamond miners. In 2022 economic sanctions were introduced against Russia, the world's largest producer of diamonds. In 2021 Russia is believed to have produced 39.12M carats [7] . According to DeBeers[8] the start of Russia's invasion of Ukraine and the imposition of related formal sanctions , as well as self-sanctioning, of Russian diamonds created uncertainty in the sector. De Beers also believed that healthy consumer demand, particularly in the US, led to polished price growth and robust demand for rough diamonds in the first half of the year. By June 2022, the economic outlook had changed and De Beers observed that consumer demand for diamond jewellery in the US softened for the second half of 2022, although it remained above pre-Covid-19 levels. Amid this economic uncertainty, De Beers also observed that retailers restocked more cautiously, causing midstream polished diamond inventories to build up through the second half of the year, putting downward pressure on polished prices and softening demand for rough diamonds. Furthermore, De Beers noted that in China, the heightened Covid-19 restrictions from the second quarter onwards impacted diamond jewellery retail sales, resulting in negative demand growth for the year. We remain confident that this investment will yield fruit, but will take additional time.'