Robust Demand Increases Sales of Gem Diamonds
Gem Diamonds on Tuesday said that the sales from its Letang mine in Lesotho increased by 6% to USD 201.3 million for the year. The sales volume increased by 11% to 109,697 carats, more than offsetting a 4% reduction in the average price to USD 1,835 per carat. The decline in average price was primarily attributable to fewer extensive and high-quality diamonds in 2020. They sold 21 diamonds worth more than USD 1 million each in 2021, compared to 34 gems the previous year.
Gem Diamonds recovered higher-grade ore, which increased production by 14% to 115,335 carats for the entire year. The business discovered six diamonds weighing over 100 carats during the year, against 16 in the earlier year. The fourth quarter's revenue dropped 8% year over year to USD 50 million. The average price per carat increased by 6% to USD 2,018 per diamond, while sales volume decreased by 13% to 24,790 carats. For the time, production climbed by 17% to 33,069 carats.
Gem Diamonds stated in August that its Ghaghoo mine in Botswana had been sold to Okwa Diamonds, a joint venture between Vast Resources and Botswana Diamonds. On the other hand, Vast eventually told the parties that it would not be proceeding with the transaction. Botswana Diamonds announced that it had secured a new partner and would complete the transaction. The companies are working together to reach an agreement, and the sale date has been extended from January 31 to March 31.
According to CEO Clifford Elphick, the company has benefited from a group-wide efficiency and cost reduction assessment, who added that demand for high-quality diamonds has remained steady. Gem Diamonds has found annual, and one-time cost savings totaling USD 20 million, up USD 5 million from the sum revealed at the time of its interim results.
Gem Diamonds recently sold a 7.87-carat pink diamond for USD 02,222 per carat during the time period, the second-highest average price in the Lesotho mine's history. According to the business, a 55.58-carat white diamond sold for USD 61,778 per carat, the highest average price for a white diamond from the mine this year. A 126-carat stone that sold for USD 56,402 per carat was among the other sales in the quarter.
According to the 11th annual Global Diamond Industry Report 2021-2022, headlined 'A Brilliant Recovery Shapes Up, by Bain & Company and the Antwerp World Diamond Centre (AWDC), the diamond industry proved its resilience by delivering excellent figures in every segment of the pipeline in 2021 and is well-positioned for the future. The impact of the pandemic, the industry's remarkable comeback, and the prospects for the future are all examined in the paper. The sector has spent a lot of money on technology in the last two years to improve operational efficiency, create compelling marketing and consumer experiences, and speed up e-commerce operations, the report stated.
As per the report, revenue grew 62 percent in the diamond mining segment, 55 percent in cutting and polishing, and 29 percent in diamond jewelry retail in 2021, all of which were higher than pre-pandemic levels (+13 percent, +16 percent, and +11 percent, respectively). The pattern was like earlier economic downturns when the diamond sector recovered with double-digit solid growth 12 to 18 months after the crisis hit its highest point.
Diamond demand remained robust throughout 2021, especially in the second half. Retail demand for diamond jewelry pushed prices and profit margins up the value chain. Miners upped output levels, and reduced inventories as rough diamond sales surged, keeping cutters and polishers busy. Thanks to solid demand and price recovery for polished diamonds, the business reached decade-high profitability.