London - De Beers’s former finance chief, who is developing a diamond mine in southern Africa, expects the industry to remain depressed this year as retail sales languish and traders struggle to turn a profit.
“I don’t see the second half of 2015 being that positive,” Stuart Brown, chief executive officer of Firestone Diamonds Ltd, said by phone. “Retail needs to recover and the midstream needs to sort itself out and that will take a bit of time. 2016 is still going to be a year of recovery.”
Rough diamond prices fell about 15 percent in the past 12 months after KBC Groep NV decided to wind down its Antwerp Diamond Bank unit, crimping credit to the Belgian port city’s traders, cutters and polishers. At the same time buyers have baulked at the prices demanded by De Beers, forcing the world’s biggest producer to lower them.
Brown, who was chief financial officer at De Beers from 2006 to 2011, is more pessimistic than some of his rivals. Dominion Diamond Corp. said last month that the industry had overcome its liquidity concerns, while Petra Diamonds Ltd. said in April that the market had stabilised.
Firestone is developing the Liqhobong mine in Lesotho and plans to start production at the end of 2016. The mine will produce about 1 million carats a year.
Brown welcomed the founding of the Diamond Producers Association, a trade group designed to promote the gems and protect the industry from threats such as synthetic stones.
“I think it’s good for the industry and everyone should be supportive of it,” said Brown, who expects Firestone to join the association once it starts mining.
Bloomberg