Last week, De Beers executives gave a presentation to Anglo American analysts about their company. (Video here.) The big news was that the company is developing a synthetic diamond detector for melee, which can screen diamonds down to one pointers.
The other intriguing device that was discussed—a machine that can grade color and clairty for rough and polished—”is proprietary technology for use within the Forevermark grading operations and designed to give the FM laboratories competitive advantage in terms of accuracy, objectivity and repeatability of measurement,” says spokeswoman Lynette Gould.
- The United States market is still shrinking in importance.
We have talked about this before, but new figures from this presentation drive the point home. Once upon a time, the American consumers bought 50 to 60 percent of the world’s diamonds. Today, that number is 37 percent.
That said, America will remain the leading market for a while; De Beers estimates that even in 2016, the United States will still command the largest chunk of the diamond market (35 percent). But India and China continue to take share away; together they will make up about 20 percent of the market in 2016.
We should also note that the U.S. market performed up to De Beers’ expectations this year—growing 4 percent—while India and China both disappointed.
Chart courtesy of De Beers.
- De Beers’ prices fell 10 percent this year.
“We expect our year-end price level to be about 12 percent lower than 2011,” said De Beers chief financial officer Gareth Mostyn. “Average prices will be about 10 percent lower than the equivalent period in 2011.”
- Yes, the De Beers retail chain loses money.
Forevermark CEO Stephen Lussier confirmed press reports that the De Beers retail chain still isn’t turning a profit.
“For us, De Beers Jewelers is a very long-term effort,” he said. “It isn’t yet breaking even, but we are investing heavily in building it. And building a brand from the scratch, a new business in a luxury field, you do have to be patient. And that’s the view that LVMH take[s] on this initiative.”
“We clearly see De Beers Jewelers as a profitable business going forward,” he said. “In particular with the building of the brand in China, we see opportunities.”
- De Beers helps make your iPhone!
“If you have an iPhone 5 or new iPad, the glass has been cut with one of our [synthetic] diamonds,” said Mellier.
Speaking of synthetics, De Beers’ synthetic-creating Element Six subsidiary is one reason why it’s so good at developing detection devices.
“[That division] is also helping us to master…the latest technologies in terms of detecting synthetic diamonds,” said Mellier. “If you know how to grow them, you know how to detect them. This is why we are at the forefront of synthetic diamond detection.”
- De Beers can buy (some) other mines.
At the presentation, De Beers executives pegged its current market share at approximately 35 percent. Not exactly a monopoly—and because of that, it is possible for the company to buy a mine or two, within limits.
“Our current market share is not such that we would be prohibited from making any kind of acquisitions,” said Bruce Cleaver, executive director, strategy and new business. “There are some that we would, there are some that we wouldn’t.”