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Rapaport TradeWire July 2, 2010

Zimbabwe cabinet approves illegal Marange rough sales with KP certificates and government agency says it already sold $23m worth in 2010.
Jul 1, 2010 6:00 PM   By Rapaport
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Rapaport TradeWire
RAPAPORT NEWS SERVICE | JULY 2, 2010   www.rapaport.com | news@rapaport.com
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RapUp July 2, 2010

Trading centers stable. Buyers at June Hong Kong show edge up on prices but still resist high seller asking prices. Zimbabwe cabinet approves illegal Marange rough sales with KP certificates and government agency says it already sold $23m worth in 2010. Botswana approves rough tenders from AK6 mine. Harry Winston secures $100m credit facility. Lazare Kaplan to be delisted from NYSE. Japan’s May polished imports +3% to $47.4m. New York State establishes $100m mortgage fund for International Gem Tower.

RapNet Data: July 1, 2010
Diamonds 706,397
Value $4,481,037,223
Carats 788,031
Average Discount -30.83%
RapNet Asking Price

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  The untenable situation in the Marange diamond fields will be part of our intensive discussions during the [34th World Diamond Congress in Moscow]. At this point in time, we can only hope that the government of Zimbabwe will refrain from making any diamond shipments until all parties are in agreement.

Moti Ganz | IDMA president

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Zimbabwe's Mines Minister Pushes Ahead

Zimbabwe mines minister Obert Mpofu claimed that his country's cabinet, as well as Israel and the European Union (EU), approved diamond sales from the country.

"It was clear from the meeting that the cabinet agrees with the immediate sale of our diamonds," he told the state-run Herald newspaper. Zimbabwe's estimated Marange stockpile totals more than 4 million carats worth about $1.7 billion. Mpofu said that he needs to come up with "a mechanism of proceeding with this [sale] process. The mechanism will be transparent and accountable."

The mines minister also claimed that his country had met the minimum Kimberley Process (KP) requirements for diamond exportation and thus would sell rough stones through the Minerals Marketing Corporation of Zimbabwe, as prescribed by the country's mandate, with KP certificates.

Earlier this week, Zimbabwe denied that it was forcing young men and boys to work at the Marange diamond fields, a charge leveled in a U.S. State Department report on human trafficking. The U.S. found that Zimbabwe's security forces had coerced youths into forced labor at the fields. Zimbabwe's Home Affairs Minister, Kembo Mohadi, called the report false, however.

"It's all lies. We are not involved in diamond mining in Chiadzwa," he told the Zimbabwe Independent. "We only have a police post there, just like any diamond mine elsewhere. It's all lies; this is a figment of their own imagination."

The "Trafficking in Persons" 2010 report, published this month, concluded that Zimbabwe had not complied with minimum standards by eliminating the practice. The report said that the country's government must stop utilizing local populations for forced diamond mining.

The U.S. State Department was disappointed that a consensus was not reached on Zimbabwe during the recent KP meeting in Tel Aviv and looked to Zimbabwe to demonstrate progress in implementing the scheme's full compliance requirements. The U.S. State Department strongly opposed any attempts to export Marange diamonds before a consensus was reached.

Given the mines minister's statements, industry members were reminded by World Federation of Diamond Bourses (WFDB) president Avi Paz that they should not purchase diamonds originating from the Marange area until the KP approves these exports. Since export approval has not yet been granted to Zimbabwe, any WFDB member found buying Marange rough will be subject to disciplinary procedures.

Court Upholds EC Ruling on De Beers, ALROSA

The European Union's (EU) Court of Justice upheld a previous ruling forcing De Beers to cease all diamond purchases from ALROSA. After the European Commission (EC) expressed concern that a deal between the two companies could lead to monopolistic practices,  De Beers agreed in 2006 to gradually reduce its buying and ceased all purchases from ALROSA in 2008, which the Commission adopted as a regulatory decision. But ALROSA appealed this decision on the grounds that it had not been heard by the court on the matter. The court subsequently dismissed ALROSA’s appeal.

Rapaport Weekly Broadcast

WATCH NOW: Zimbabwe's mines minister made at least two major false statements to his country's press corps following the KP meeting in Tel Aviv one of which caused the World Diamond Council to make it very clear which industry body was ultimately and solely responsible for approving Marange exports. Secondly, nongovernmental organizations (NGOs) had to defend themselves when the minister claimed they had attempted to "extort" export approval by asking for a bribe. Meanwhile, consumers in the U.S. do not feel good about the economy, despite what most pundits claim, as consumer confidence and the Dow tanked in June. Walmart appointed a new president for its U.S. retail operations.

War Crimes Court Subpoenas Super Model

The Special Court for Sierra Leone, the body tasked with determining Charles Taylor's fate for war crimes, approved the prosecution's request to summon model Naomi Campbell and actresses Mia Farrow and Carol White. The defense claims that Taylor gave Campbell (pictured) a rough diamond in 1997. Farrow has told the press that she had first-hand knowledge of the gift. Prosecutors believe that testimony from the women will support claims that Taylor dealt in blood diamonds from Sierra Leone.

U.S. Chain-Store Sales +3%

U.S. chain-store sales rose 3 percent year on year this past week, according to the International Council of Shopping Centers (ISCS) and Goldman Sachs. Counter sales at the chains rose 2.1 percent against the previous week as department-store business picked up, ICSC's chief economist, Michael Niemira, noted. ICSC maintains that for the month of June, chain-store sales should increase in the range of 3 percent to 4 percent compared with one year ago.

Charm Diamond Centres to Sell Victor Stones

Charm Diamond Centres in Nova Scotia said it received the right to carry diamonds mined, cut and polished in Ontario, Canada. The company's diamonds are mined at the De Beers Victor mine and then cut and polished by Crossworks Manufacturing in Sudbury. The finished stones will be sold at select Charm Diamond locations and will also be available at all of its locations during Charm's 2010 traveling trunk show.

Affluents Boost Jewelry Sales for 2009

Unity Marketing found that women's luxury jewelry purchases rose 6.5 percent year on year in 2009, while men's jewelry spending jumped to now account for 20 percent of total jewelry expenditures. The news was a bright spot in the company's Personal Luxury Report 2010, which also found that overall, fewer affluents indulged in luxury purchases, but those who did ended up spending more on products and services.

Myanmar's Gems Sale Underway

Myanmar's special gems emporium, currently underway in Yangon, is reportedly offering buyers 11,500 lots of jade, as well as gold, gemstones and finished jewelry. The 13-day gems emporium ends on July 7 and, according to the government, has already attracted more buyers than the annual emporium that was held in March. Myanmar sold about $500 million of gems during its March sale.

Moscow Congress Sets Agenda

The International Diamond Manufacturers Association (IDMA) set its agenda for the upcoming 34th World Diamond Congress to be held in Moscow from July 11 to July 13.The Congress will address issues in Zimbabwe, getting the International Diamond Board off the ground, and ongoing credit terms that are pressuring diamond manufacturers across the rough supply pipeline. Diamond manufacturers are determined to phase out their traditional role of bearing the brunt of the financial burden in the diamond supply pipeline, according to Moti Ganz (pictured), the president of IDMA.

GJF Weighs Direct Tax Code Proposal

The All India Gems & Jewellery Trade Federation (GJF) has opposed a proposed "search and seizure" and a 10 percent tax being considered as part of India's Direct Taxes Code, according to India's Business Line. The federation made its case to the Finance Ministry, noting that stock seizure would create problems for its members and that the provisions were discriminatory toward only a single industry. The 10 percent tax on all payments made for gold, diamonds and jewelry would also result in reduced working capital, especially for firms that are already having liquidity issues.

Dealer in Rosy Blue Case Dies

Diamond dealer Chad Davis reportedly died in Orlando, Florida. Davis, 38, was at the center of legal battle with Rosy Blue for $3 million in diamonds that he claimed had been stolen from him at a shopping mall. Rosy Blue contended, though, that Davis' story was a scam and the company won a $6 million judgment. Davis claimed he couldn't pay the award and filed for bankruptcy. Rosy Blue's attorney told the Orlando Sentinel that he could not speculate on how the dealer's death would impact the ongoing litigation.

AWDC Board Elects New President

The board of directors for the Antwerp World Diamond Centre (AWDC) elected Nishit Parikh to serve as its president for the upcoming two years. Parikh, 44, is a citizen of Belgium, but was born in Navsari, India. He heads Diarough, which employs 50 in Antwerp and is a Diamond Trading Company sightholder. The board also elected two vice presidents to serve alongside Parikh -- Philippe Barsamian, who is a representative of the Antwerp diamond bourse, and Stéphane Fischler, who represents the manufacturers’ associations.

Japan's Polished Imports +3% in May

Japan’s polished diamond imports rose 3.3 percent year on year to $47.4 million in May 2010. Polished imports from India increased by 5.8 percent to $18.4 million, while imports from Japan's other two main supply sources, Belgium and Israel, fell 7.8 percent and 16.7 percent, respectively. During the first five months of the year, Japan’s polished imports were up 3.1 percent year on year to $274.5 million.

Negotiations for AK6 Sales Finalized

Lucara Diamond and African Diamonds completed a marketing arrangement with Botswana through their joint-venture company, Boteti, wherein production from the AK6 project may be sold through either open tender or exclusive contract. Lucara, the AK6 project operator, holds a 60 percent interest in Boteti, while African Diamonds holds 40 percent. An updated feasibility study of AK6 noted indicated resources of 8.2 million carats of diamonds, while the mine's design delineated a probable reserve of 6.3 million carats in an open pit extending to a depth of 324 meters. These reserves will be mined over an 11-year life span. The study also indicated that the first phase would require a capital investment, including contingencies, of $120 million.

Jwaneng Mine Work Begins

Debswana and Firestone Diamonds will begin work on a modular tailings treatment plant at the Jwaneng Mine in Botswana. The project is a key component of developing toll treatment opportunities to supplement Firestone's mining operations at BK11 and the evaluation and development of other kimberlites in the Orapa and Tsabong kimberlite fields. The Jwaneng tailings project could generate up to $150 million in toll treatment revenue. Firestone also reported significant progress at its BK11 project, with construction of the production plant on schedule.

Large Stone Found in Panna Mines

The National Mineral Development Corporation unearthed a 34.37-carat rough diamond at the Panna mines in Madhya Pradesh, India. The pear-shaped stone was described as being of extremely good quality and has been sealed in preparation for auction in Panna, according to India Today.

For the week ending July 1, 2010:

  July 1 June 24 Chng.  
$1 = Euro 0.811 0.811 0.000  
$1 = Rupee 46.63 46.35 0.3  
$1 = Israel Shekel 3.89 3.87 0.02  
$1 = Rand 7.75 7.60 0.15  
$1 = Canadian Dollar 1.06 1.04 0.02  
Precious Metals        
Gold $1,197.30 $1,240.90 -$43.60  
Platinum $1,502.00 $1,561.00 -$59.00  
Stock Indexes       Chng.
BSE 17,509.33 17,730.24 -220.91 -1.2%
Dow Jones 9,732.53 10,152.80 -420.27 -4.1%
FTSE 4,805.75 5,100.23 -294.48 -5.8%
Hang Seng 20,128.99 20,733.49 -604.50 -2.9%
S&P 500 1,027.37 1,073.69 -46.32 -4.3%
Yahoo! Jewelry 766.69 823.50 -56.81 -6.9%
Birks & Mayors $1.10 $1.17 -$0.07 -6.0%
Blue Nile $46.27 $48.87 -$2.60 -5.3%
Charles & Colvard $2.64 $2.85 -$0.21 -7.4%
DGSE Companies $3.20 $3.10 $0.10 3.2%
Fuqi Intl. $6.20 $8.23 -$2.03 -24.7%
JCPenney $21.43 $23.27 -$1.84 -7.9%
Kohl's $48.72 $49.80 -$1.08 -2.2%
LJ Intl. $2.57 $2.85 -$0.28 -9.8%
Macy's $18.30 $18.88 -$0.58 -3.1%
Man Sang $1.85 $1.95 -$0.10 -5.1%
Movado Group $10.81 $10.88 -$0.07 -0.6%
Nordstrom $32.78 $35.42 -$2.64 -7.5%
Saks $7.53 $8.03 -$0.50 -6.2%
Signet $27.59 $29.93 -$2.34 -7.8%
Sotheby's $22.75 $26.30 -$3.55 -13.5%
Tiffany $38.12 $40.79 -$2.67 -6.5%
Walmart $48.35 $50.02 -$1.67 -3.3%
Zale $1.55 $1.92 -$0.37 -19.3%
Bulgari €5.82 €6.20 -€0.38 -6.1%
Bijou Brigitte €119.55 €118.50 €1.05 0.9%
Damiani €0.86 €0.90 -€0.04 -4.4%
LVMH €85.20 €92.04 -€6.84 -7.4%
PPR €98.10 €104.65 -€6.55 -6.3%
Richemont CHF 35.65 CHF 40.05 -CHF 4.40 -11.0%
Swatch Group CHF 294.20 CHF 321.00 -CHF 26.80 -8.3%
Theo Fennell (pence) 38.22 38.00 0.22 0.6%
INDIA (rupee)        
Classic Diamond 20.80 21.25 -0.45 -2.1%
Gitanjali Gems 125.30 124.35 0.95 0.8%
Goldiam Intl. 44.50 44.10 0.40 0.9%
Rajesh Exports 82.15 86.60 -4.45 -5.1%
Ren. Jewellery 74.75 78.75 -4.00 -5.1%
Su-Raj Diamonds 50.95 52.25 -1.30 -2.5%
Titan 2,348.90 2,238.45 110.45 4.9%
Zodiac JRD 26.70 26.90 -0.20 -0.7%
Suashish Diamonds 175.00 173.50 1.50 0.9%
Michael Hill NZD 0.68 NZD 0.69 -NZD 0.01 -1.4%
Harry Winston CAD 13.09 CAD 13.49 -CAD 0.40 -3.0%
Lucara Diamond CAD 0.82 CAD 0.80 CAD 0.02 2.5%
Mountain Province CAD 2.73 CAD 2.50 CAD 0.23 9.2%
Peregrine Diamonds CAD 1.92 CAD 1.99 -CAD 0.07 -3.5%
Rockwell Diamonds CAD 0.07 CAD 0.07 CAD 0.00 0.0%
Shore Gold CAD 0.68 CAD 0.74 -CAD 0.06 -8.1%
Stornoway Diamond CAD 0.58 CAD 0.62 -CAD 0.04 -6.5%
True North Gems CAD 0.09 CAD 0.10 -CAD 0.01 -10.0%
UK (pence)        
African Diamonds 29.05 32.86 -3.8 -11.6%
Anglo American 2,271.50 2,545.00 -273.5 -10.7%
BHP Billiton 1,694.00 1,920.00 -226.0 -11.8%
Firestone Diamonds 32.50 35.09 -2.6 -7.4%
Gem Diamonds 197.80 219.00 -21.2 -9.7%
Gemfields 4.75 5.00 -0.3 -5.0%
Mwana Africa 7.28 8.30 -1.0 -12.3%
Namakwa Diamonds 41.00 47.00 -6.0 -12.8%
Petra Diamonds 67.50 69.50 -2.0 -2.9%
Rio Tinto plc 2,904.50 3,275.44 -370.9 -11.3%
Stellar Diamonds 11.50 12.00 -0.5 -4.2%

Polished and rough trading activity

POLISHED: Slightly weaker trading in the local markets compared with previous weeks as buyers turn more cautious given higher asking prices. Some traders were however busy at the Hong Kong show.
-1 point: Very Good demand: -$500 whites.
-2 point: Good demand: -$300 whites.
Fair Demand: +$350 whites.
2-7 point: Very Good demand: -$350 whites.
Good Demand: +$350 whites.
8-18 point: Good demand: -$400 whites.
Fair Demand: +$500 whites
20 points: Good demand: -$350 & +$600 whites.
25 points: Good demand: -$350 & +$700 whites.
33 points: Good demand: $300 - $500 & +$850 whites.
50 points: Good demand: $500-$700 & +$1000 whites.
75 points: Good demand: $700-$900 & +$2000whites.
1 carat+: Very good demand: -$2000 whites.
Good demand: +$2000 whites.
-3 point: Good demand: $200-$250 whites.
+3 point: Good demand: $250-$300 whites.
+9-18 point: Good demand: $250-$350 whites.
20 point: Fair demand: $700-$750 whites.
25 point: Fair demand: $800-$850 whites.
50 point: Fair demand: $400-$700 & $1600-$1,800 whites.
75 point: Fair demand: $800-$1,200 whites.
1 carat+: Good demand: $1000-$2000 whites.
Fair demand: +$2,500 whites
-6 point: Fair demand: $250-$350 whites.
+7-18 point: Good demand: $250-$400 whites.
20 point: Fair demand: $250-$400 & $900-$1,000 whites.
25 point: Fair demand: $250-$400 & $1,100-$1,200 whites.
33 point: Fair demand: $250-$400 & $1,300-$1,500 whites.
50 point: Fair demand: $1,600-$1,800 whites.
75 point: Fair demand: $2,600-$2,800 whites.
1 carat+: Good demand: $300-$600 & +$1,000 whites.
Tapers & Baguettes
Fair demand: $600-$800 +5mm whites. $250-$325
2mm-2.5mm whites; $350-$400, 2.5mm-3mm whites;
             $400-$450 3mm-4mm, $500-$600 4mm –
             5mm & $175-$250 +2mm-3mm whites.
ROUGH: Buyer price resistance forces sellers to soften their stand and holds activity to a minimum since the local markets can't sustain high asking prices.
1-5 point: Good demand: $90-$130 makeables; $100-$200 crystals.
$50-$80 makeables.
Fair demand: $10-$25 & $50-$100 OW TTLB & TTLC.
6-20 point: Very Good demand: $155-225 crystals; $110-$185 makeables.
Good demand: $65-$115 fancy shapes; $45-$75clivage.
Fair demand: $50-$90 OW TTLC & TTLB rounds.
21-50 point: Very Good demand: $200-275 makeables;
$120-$200 & $225-$300 crystals.
Good demand: $90-$200 fancy shapes;
$95-$200 rounds; $50- $90 clivage.
Fair demand $20-$40 OW TTLC & TTLB.
0.51-1.00 carat: Very Good demand: $180-$340 makeables;
$125-$260 & $290-$470 crystals.
Good demand: $90-$125 makeables;
$100-$210 fancy shapes; $55-$110 clivage.
Fair demand $60-$100 OW TTLC & TTLB.
1.01-2.00 carat: Very Good demand: $240-$590 rounds; $290-$750 crystals.
Good demand: $100-$130 clivage; $200-$380 all fancy shapes.
Fair demand: $140-$180 OW TTLC & TTLB.
2.01-3.00 carat: Good demand: $270-$1,050 makeables; $350-$1,300 crystals;
$400-$825 fancy shapes; $210-$300 clivage.
Fair demand: $100-$325 flats & TTLC & TTLB
$350-$800 OW.
5.00 carat+:  Good demand: $1,000+ makeables, crystals & all fancy shapes till L color.
Mixed Lot: Good demand: $2-$40.


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Tags: African Diamonds, Alrosa, Anglo American, Antwerp World Diamond Centre (AWDC), AWDC, Belgium, BHP Billiton, Blood Diamonds, Bulgari, Charles Taylor, Compliance, Consumers, De Beers, Debswana, Dubai, Economy, European Union, Firestone, Gem Diamonds, GIA, Government, Harry Winston, Hong Kong, ICSC, India, International Diamond Board, Israel, Japan, Jewelry, Kimberley Process, Lazare kaplan, Lucara Diamond, LVMH, Manufacturing, Michael Hill, Movado, Myanmar, Petra Diamonds, Production, Rapaport, Richemont, Rio Tinto, Rockwell, Signet, Sotheby's, Stellar Diamonds, Tenders, Theo Fennell, Tiffany, Titan, Victor Mine, World Diamond Council, World Federation of Diamond Bourses (WFDB), Zale, Zimbabwe
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