Uncut diamonds from southern Africa and Canada are seen at De Beers headquarters in London
London - De Beers sold almost twice the diamonds it mined in the first quarter as the top producer cleared stocks that piled up after India torpedoed demand in the local gem industry by abolishing large-denomination banknotes.

The Anglo American unit sold 14.1 million carats, the most since at least the start of 2016, when it first published data, and mined 7.4 million carats, it said on Monday.

De Beers, which does not disclose inventories, built up stocks late last year. That followed India’s shock decision to abolish 500 rupee (R101) and 1000 rupee banknotes, saying it was seeking to tackle corruption.

The policy hit cheaper gems in particular as local polishers and traders often rely on cash transactions. As much as 90 percent of the world’s rough diamonds pass through India to be cut, polished or traded.

De Beers reacted to the Indian policy by allowing clients to refuse more of the company’s cheaper stones at its sales than typically allowed under complex offering arrangements.

It also let them turn down lower-quality gems from mixed assortments.

This year, the producer has begun offloading some of the stocks it built up as a result. De Beers sold $1.86 billion (R24.35 billion) in its first three sales of the year, including a $720 million offering in January, its biggest in at least a year.

Alrosa, the second-biggest diamond miner, has also been selling more diamonds, with first-quarter sales up 17 percent to 12.1 million carats.

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The first quarter figures for De Beers imply it reduced stocks by 6.7 million carats, or 43 percent more than for the whole of last year, and it’s unclear that it can continue at the same rate, according to Barclays.


“With similarly strong sales at Alrosa in the first quarter, we do worry about the sustainability of the current market environment,” it said in a note.

De Beers has cut the amount of gems it plans to sell to some clients by about a fifth, said people familiar with the matter, who declined to be identified as the information is private.

Not all buyers are affected, they said.

The company’s quotas on sales set how many diamonds its 80 or so customers can buy at 10 offerings a year. Levels were cut as stocks, built up during an earlier downturn in 2015, have been offloaded.

De Beers is also directing more sales to Botswana, Namibia and South Africa, where it mines most of its stones.