Bruce Cleaver. Picture: BLOOMBERG/CALVIN SIT
Bruce Cleaver. Picture: BLOOMBERG/CALVIN SIT

The CEO of De Beers says an improvement in diamond sales demonstrates that the poor demand for smaller stones that has plagued the company and its competitors in recent months is stabilising.

Bruce Cleaver said the poor demand for stones valued at less than $100 a carat had been due to a surfeit of supply, currency weakness in India and the difficulty faced by gem cutters in accessing financing. While the currency of India, which is the world’s biggest cutter and polisher of diamonds, has fallen 5.7% against the dollar over the last year, the rupee has arrested that decline, gaining 1.9% over the last three months.

“If you see the results we’ve published earlier this week it’s the best sight we’ve had this year,” Cleaver said in an interview in Cape Town on Thursday. “We are seeing a stabilisation in the lower-end goods so we would expect over time that it would work itself out as supply slowly normalises.”

De Beers, the world’s biggest diamond company, has been forced to cut prices to sell its cheaper gems in recent months, and its sales have been depressed. While it sold $575m worth of gems in its so-called third cycle of the year, it was only able to realise about $500m in each of its first two cycles of the year. Cycles include the 10 so-called sights, or sales, De Beers holds in Botswana every year as well as smaller auctions.

Cleaver said the company was “cautiously optimistic” for 2019 and believed that diamond supply had peaked and that it would support prices in coming years.

De Beers, which is owned by Anglo American, is famous for its tight control over the diamond market. Its sales in Botswana, where it mines diamonds in a joint venture with the government, are to a select group of customers. The buyers are expected to specify the number and type of diamonds they want, and then carry out the purchases at a price set by De Beers.