Rapaport TradeWire - February 1, 2002
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Trade Alert. "HPHT color treated diamonds are being sold in the market
without disclosure or laser inscriptions. Some of the stones are small
fancy colors. There is a possibility that rough is also being
treated." U.S. retails sales slow with steady demand for classic
items. Jewelers are cautious and keeping inventories low. Consumer
confidence improving. Outlook for Valentine's Day hopeful.
Fancy Comments
Emerald Cuts, Princesses and Radiants dominate fancy demand with
matched pairs and layouts selling well even in lower colors and
clarities. Ovals doing slightly better. Pears in smaller sizes quiet
although some demand for larger better qualities. Marquises mixed with
limited demand for fashion jewelry. Triangles doing well in matched
pairs for side stones. Hearts weak with only occasional demand for
larger sizes.
--- Rapaport at Orlando Show
Breakfast Lecture - Room 224G
Monday February 4, 8-10 am.
Visit us, Booth #20003
=== World News ===
--- Consumer Confidence Rises for Second Straight Month
Consumer confidence climbed for a second straight month in January, as
The Conference Board's Consumer Confidence Index increased 2.7 points
to 97.3. The Expectations Index rose 4.5 points to 96.9, and the
Present Situation Index held steady at 97.8.
"While the economy has not turned around yet, the worst may well be
over," said Lynn Franco, director of The Conference Board's Consumer
Research Center. "The upturn in confidence is being driven by growing
confidence about the business outlook and job prospects. Consumer
expectations for the future are now lighter than they have been in
more than a year."
Consumers rating conditions as "good" increased from 1.1% to 18.4%,
but those rating conditions as "bad" increased 0.7% to 22.4%. Those
expecting an improvement in business conditions increased 2.8% to 25%.
The percentage of those reporting jobs as plentiful edged up 0.5% to
18.4%, but those claiming jobs were "hard to get" also increased 0.8%
to 22.7%. Currently, 18.8% of consumers expect more jobs to become
available in the next six months, up from 16.5% last month. Those
expecting fewer jobs to become available decreased 1.1% to 18.2%.
Regarding income expectations, 19% of consumers anticipate a gain,
down from 21.5% in December.
--- United States GDP Increased During Fourth Quarter
The United States gross domestic product (GDP) grew at a 0.2% annual
rate during the fourth quarter of 2001, the Commerce Department said
on January 29. Analysts were predicting a 1% decline in GDP, which
would have been the second consecutive quarter of negative growth. GDP
fell 1.3% in the third quarter.
The GDP grew 1.1% during the full-year 2001, the weakest performance
since a 0.5% decline in 1991. The GDP increased 4.1% in 2000.
Consumer spending increased 5.4% in the fourth quarter, and spending
on durable goods increased 38.4% - the largest jump in 15 years.
Increased spending is largely attributable to auto sales, which saw a
record sales pace in October, spurred by zero% financing offers. The
Commerce Department also attributed the increase in spending to lower
tax rates and tax refund checks.
U.S. companies liquidated $120.6 billion worth of inventories during
the quarter, the largest drop on record.
--- Bulgari's Preliminary 2001 Sales Increased 13.3%
Bulgari's preliminary report for the full-year 2001 indicates that
sales increased 13.3% to $659.6 million. The figure is below analyst
expectations, which put the yearly sales figure at $677.7 million, a
16.4% increase. Jewelry sales increased 26% to $248 million.
Comparable sales figures were not provided. Sales increased in all
geographic areas except the Americas, where they declined 17%.
Bulgari's fourth quarter sales declined 6% to $194.6 million, hurt by
a slow holiday season and sluggish economy. Fourth quarter jewelry
sales increased 5% to $79.2 million.
"I'm satisfied with the obtained full-year results, considering the
current economic climate, which was heavily influenced by the tragic
events of September 11," said CEO Francesco Trapani. "I believe that
the further increase in the jewelry and perfume sales is particularly
positive as they are based on the already very strong increase of
2000."
Trapani said Bulgari is concentrating on cost controls that can
increase profits for 2002, but he also warned that sales growth will
be slower in 2002 than in past years.
Bulgari will post final full-year results on March 28.
--- Richemont Third Quarter Comparable Sales Drop 8%
Swiss luxury goods group Richemont's sales for the third quarter ended
December 31, 2001 were flat, compared to Q3 2000. Comparable sales,
discounting new acquisitions, declined 8%. Richemont did not provide
absolute figures for the quarter.
"Sales were somewhat better than we had anticipated given the
depressed economic and political climate which prevailed during the
period," said CEO Johann Rupert.
Richemont's sales for the first half ended September 30, 2001 were
$1.6 billion, and jewelry sales increased 4% to $348.6 million.
--- Sotheby's Partners With EBay
Sotheby's formed an alliance with the online auction website eBay. The
financial terms of the deal were not disclosed. Under the terms of the
new partnership, eBay will manage Sothebys.com, the auction house's
online wing, and link to eBay's trading pages. As a result, eBay users
searching for jewelry, art and other collectibles will be linked to
items for sale by Sotheby's. Users will also be able to make online
bids via the eBay platform for items for sale at Sotheby's traditional
auctions in New York and London. The new Sothebys.com site will launch
this summer.
"This alliance with the most successful online marketplace in the
world combines eBay's powerful technology platform and global
following of 42 million registered users with Sotheby's unmatched
auction expertise and experience," said Bill Ruprecht, Sotheby's CEO.
"It represents the next phase in Sotheby's online auction business,
and we believe it will positively position Sothebys.com for future
growth."
--- Aurafin OroAmerica Acquiring Assets of Little & Co.
Aurafin OroAmerica LLC, a privately held company based in Ft.
Lauderdale, Florida, has agreed to acquire the assets of Little &
Company, a Providence, Rhode Island based gold earring manufacturing
company. Aurafin expects the agreement to close within the next 30
days. The company did not disclose the dollar amount associated with
the acquisition.
"The addition of Little & Co.'s earring manufacturing expertise
further enhances Aurafin OroAmerica's price-pointed karat gold jewelry
line," said Aurafin OroAmerica Chairman and CEO Michael Gusky.
"Combining greater control of the supply chain and our distribution
strength allows us to better serve the increasing demands of the
nation's largest retailers."
--- Antwerp Diamond Unions Impose One-Day Strike
The diamond polishers in both of Antwerp's two diamond unions returned
to work on Tuesday following Monday's peaceful one-day strike. The
main point of disagreement is over workers' demand for a salary
increase.
"It was a strike, but a very quiet one; there was a good atmosphere,"
Diamond High Council (HRD) Chief of Staff Yuri Steverlynck said.
"There weren't harsh words or anything, which is a good signal, so
we'll see. Everybody hopes here that we'll find a solution very
quickly."
The one-day strike is a common practice used by European unions to put
pressure on employers during contract negotiations. Belgian diamond
authorities have not yet estimated how much the strike will cost
employers financially. The parties were scheduled to resume
negotiations on Thursday, January 31.
Steverlynck said contracts are renegotiated every two years and that a
disagreement of this magnitude is "very rare." It has been over 40
years since the Belgian diamond industry saw a strike of this
proportion.
"The problem has almost never been this urgent or at the level of
general agreement," Steverlynck said. "If there were problems, they
were always within one or two specific workshops, but not at the level
of not reaching an agreement for every segment of the market."
The Belgian diamond industry has come under pressure in the past year.
The high cost of labor in Western Europe coupled with a slow year for
global diamond demand has made it hard for workers to get the hours on
the job that they want, while the lack of income is also making it
harder for employers to increase wages. Steverlynck said Belgium is
trying to attract more workers to its rapidly diminishing polishing
workforce by offering incentives like training programs and
technological advancements. Steverlynck also said that many companies
stay in Belgium because they simply enjoy operating out of Western
Europe and find it advantageous being close to Antwerp. However, money
for polishers remains an issue in the short-term, and European Union
law prohibits Belgium from giving financial support to any one
industry.
"We had 25,000 polishers 30 years ago, and now we have around 2,300,"
Steverlynck said. "This is more or less a critical minimum. We are
confident that this segment will stay here - in the more limited way
as we know it now, but it will remain. Of course, it is very
regrettable that we come now to a strike, but on the other hand, this
might be the signal for further negotiations in order to come quickly
to a solution."
=== Mining ===
--- Rio Tinto 2001 Diamond Profits Down 15%
Rio Tinto's profits earned from diamond production during the
full-year 2001 declined 15% to $58 million. Diamond production during
2001 increased 52% to 26.1 million carats, largely due to the
acquisition of Australia's Ashton Mining in late 2000. Profits from
the Argyle mine declined 14.7% to $58 million, and profits from the
Diavik mine declined 23.3% to $33 million. The company attributed the
decline in diamond profits to low global diamond demand.
Rio Tinto's total profits for the full-year 2001 declined 28%,
compared to 2000, to $1.1 billion after writing down the value of
assets by $583 million. The writedown related to the company's
addressing underperformance at its Kennecott Utah Copper operations.
Excluding the writedown, profits increased 10% to $1.7 billion.
Rio Tinto Chairman Sir Robert Wilson said economic signals are mixed
for 2002 with some signs that the U.S. economy is starting to
stabilize.
"We shall have to wait and see, but in any event, significant
improvement still seems unlikely before the middle of the year, at the
earliest," Wilson said. "Neither Europe, nor especially Japan, are
expected to lead the recovery."
--- Trivalence Diamond Production Up 2.7% Last Quarter
Trivalence Mining Corporation's diamond production during the quarter
ended December 31, 2001 increased 2.7% to 17,673 carats (240,812 tons
processed), compared to the same quarter in 2000.
Production at the Aredor Mine in Guinea increased 59.7%, compared to
the comparable quarter in 2000, and increased 175%, compared to the
quarter ended September 30, 2001, to 13,726 carats (205,051 tons
processed).
Production at the Palmietgat Mine in South Africa declined 54.2%,
compared to the comparable quarter in 2000, and declined 68%, compared
to the quarter ended September 30, 2001, to 3,947 carats (35,761 tons
processed). The declines were attributed to heavy rains in November
and December 2001 and lower average grade from mining the lower-grade
K14E pipe.
Trivalence conducted two diamond sales during the quarter: one sale
consisted of 5,653 carats, produced at the Aredor mine and sold for
$909,954 for an average price of $160.47 per carat, and the other sale
consisted of 25,578 carats, produced at the Palmietgat mine, and sold
for $126,635 for an average of $4.95 per carat. The lower price of the
Palmietgat sale was a result of its including all the boart
accumulated since the start of production.
--- AngloGold 2001 Profits Increased 94.6%
AngloGold's profits for 2001 increased 94.6% to $190.9 million. Annual
sales increased 15% to $1.5 billion.
During the fourth quarter, profits increased 104% to $78.4 million.
Sales during the quarter increased 15% to $444 million.
"AngloGold produced strong earnings in the first three quarters of
2001, creating a tough base line for the fourth quarter," said CEO and
Chairman Bobby Godsell. "Nearly half of this company's earnings now
come from outside of South Africa and are therefore unaffected by the
rand/dollar exchange rate. Seen in this light, the improved earnings
and returns achieved in the fourth quarter represent an impressive
performance."
--- BHP's Second Quarter Diamond Production Increased 192%
Australian mining company BHP Billiton's second quarter diamond
production increased 192%, compared to Q2 2000, to 928,000 carats. For
the half-year, diamond production increased 171% to 1.7 million
carats. The large increases reflected the company's increased
ownership of the Ekati diamond mine in July 2001 from 51% to 80% as
well as the commencement of mining at the misery pipe deposit in
December 2001.
--- Diavik on Schedule and Within Budget During Fourth Quarter 2001
The construction of the Diavik mine in the Canadian Northwest
Territories progressed as planned during the fourth quarter 2001. Work
continued on the site's diesel power plant, sewage treatment plant,
boilerhouse, process plant, maintenance shop and arctic corridors, and
the plant's first conveyor and scrubber were installed. Management
said they plan to ferr
</tout 2,700 loads of fuel and supplies to the
site this winter. The mine stayed within the $810 million capital cost
budget and is on schedule to begin production in the first half of
2003.
--- Ashton Starting 2002 Exploration Program in Alberta
Ashton Mining of Canada Inc. is commencing its 2002 exploration
program for the Buffalo Hills property in north-central Alberta. This
year's program has three components. The first is a drilling program
on the K252 kimberlite. The second element consists of ground
geophysical surveys over a number of magnetic and electromagnetic
anomalies with drilling to follow, if warranted. And the third element
consists of an airborne EM geophysical survey intended to identify
additional anomalies on the property.
The Buffalo Hills program is a joint venture between Ashton - 45%;
Alberta Energy Company Ltd. - 45%; and Pure Gold Minerals Inc. - 10%.
=== Robberies ===
--- Thieves Steal $500,000 in Diamonds From Schnitzer Factory
Three masked men stole $500,000 worth of diamonds from the Shmuel
Schnitzer polishing factory on January 30, according to Israeli
financial newspaper Globes. The thieves robbed the factory on Eliav
Street in Ramat Gan at gunpoint, and escaped in a vehicle waiting for
them nearby. The robbers were caught on a surveillance camera in the
factory before they put on their masks.
Schnitzer confirmed that his family, in a partnership with diamantaire
Yaakov Cohen, owns the factory and said that it is uninsured.
=== Africa ===
--- RUF Inquiry Finds No Links to Bin Laden
The Revolutionary United Front (RUF) says it has conducted an internal
inquiry into allegations that diamond trading has occurred between its
members and members of Osama brounaden's al-Qaida terrorist network
and that it has found that no indication that such a link exists. The
allegations first surfaced in a Washington Post article published in
November 2001.
"While it is remotely possible that individuals associated with
al-Qaida may have met with individuals associated with the RUF inside
Sierra Leone, or indeed outside the country, with a view to purchasing
mined diamonds," said Omrie Golley, the chairman of the RUF's
Political and Peace Council, which conducted the probe, "these
meetings - if indeed they took place at all - took place unwittingly,
without the knowledge on the part of the RUF that the individuals that
they may have met were connected with al-Qaida in any way."
Golley said the council interviewed more than 140 RUF members over the
allegations. It made no written record of its findings or its
deliberations, and the investigation consisted only of listening to
oral testimonies by RUF members. Issa Sesay, the RUF's interim leader,
was among those interviewed, but Golley would not divulge the contents
of that discussion.
--- Two Britons Arrested in Angola For Smuggling Conflict Diamonds
Two men have been arrested in southern Angola for allegedly smuggling
illicit diamonds. They are both British, and one reportedly has a dual
British and South African citizenship. They took off from an airport
near Johannesburg over the January 26 weekend and landed in a remote
military area in Angola where heavy fighting between the government
and the country's UNITA rebels was taking place. The men are said to
have been on their way to Namibia when they made an emergency landing.
They are being detained as Angolan authorities determine whether to
bring up charges.
INVITATION
----------
Martin Rapaport invites you to a special breakfast presentation.
Topic: "PROFIT FROM THE CHANGING DIAMOND MARKETS"
Part of the Educational Program
of the JCK Orlando Show, Session #13.
When: Monday, February 4, 2002
Time: 8 - 10 am
Where: JCK Orlando Show, Room 224G at the show.
To register: 212-354-9100 ext. 245 - Daudri
or email: daudri@diamonds.net
Space is limited so please register now.
While you're at the JCK Orlando Show February 3-5,
visit the Rapaport Booth #20003.
Contact nicole@diamonds.net for an appointment. |
