Diamond Industry: an overview - Allan Hochreiter, Boutique

36 Pages·2010·0.47 MB·English

Diamond Industry:
an overview
James Allan
April
2010
Contents
(cid:131) Diamond industry in perspective
(cid:131) Who are the producers
(cid:131) Production profile
(cid:131) Last two years> what happened?
(cid:131) Market capitalisation for the juniors (2008 to 20101)
(cid:131) Supply demand forecast to 2020
(cid:131) Leverage off the diamond market
(cid:131) Conclusion
2
Diamond production in perspective ($bn)
9
Diamonds
14
10
Platinum (3PGE)
27
29
Nickel
50
2009
2008
73
Gold
74
80
Aluminium
99
112
Copper
126
0 20 40 60 80 100 120 140
3
Concentration of production by value (2008)
16%
0%
2%
5% De Beers
44%
Alrosa
Rio Tinto
BHP Billiton
Gem Diamonds
Petra Diamonds
9%
Others
4 producers
Control 82% of supply
24%
4
Share of global diamond production (140 million
carats) 2008
2% 10% South Africa
Botswana
22%
Namibia
Russia
Angola
20%
Australia
Canada
DRC
8%
Lesotho
1%
Tanzania
Sierra Leone
13%
Zimbabwe
20%
Other
4%
5
Share of global diamond production
20,000
Zimbabwe
18,000
Tanzania
16,000
Sierra Leone
14,000 Lesotho
12,000 Australia
DRC
10,000
m
$ Namibia
8,000
Angola
6,000
South Africa
4,000
Canada
2,000 Russia
0 Botswana
5 9 5
0 0 1
0 0 0
2 2 2
6
Cutting centre debt levels
16,000
14,000
12,000
10,000
m
$ 8,000
6,000
4,000
2,000
-
0 2 4 6 8 0 2 4 6 8 0 2 4 6 8
8 8 8 8 8 9 9 9 9 9 0 0 0 0 0
9 9 9 9 9 9 9 9 9 9 0 0 0 0 0
1 1 1 1 1 1 1 1 1 1 2 2 2 2 2
7
The last two years…..market
(cid:131) Early 2008> Positive market >Diamond
Polished Prices
shortage leading to rising diamond
prices…
(cid:131) September 2008>Collapse of Lehman
Brothers
(cid:131) September 2008>Credit tightened in
financial market
(cid:131) October 2008>Credit lines withdrawn
for diamantaires
(cid:131) October- December 2008>Collapse in
diamond prices
8
The last two years…..producer response
(cid:131) “Old De Beers” would have bought up diamonds and stockpiled
(cid:131) “New De Beers” cut production by 90% in Q1 2009>reduced supply to the
market (Economics 101)
(cid:131) Increased production from Q28000
7000
De Beers Sales 1980-2009
(cid:131) Sales 1H 2009 down 68%
6000
5000
(cid:131) 2009 sales lowest since 1986
4000
3000
2000
1000
0
0 1 2 3 4 5 6 7 8 9 0 1 2 3 4 5 6 7 8 9 0 1 2 3 4 5 6 7 8
8 8 8 8 8 8 8 8 8 8 9 9 9 9 9 9 9 9 9 9 0 0 0 0 0 0 0 0 0
9 9 9 9 9 9 9 9 9 9 9 9 9 9 9 9 9 9 9 9 0 0 0 0 0 0 0 0 0
1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 2 2 2 2 2 2 2 2 2
9
Concentration of production 2009
De Beers
Others
31%
21%
Petra
Diamonds
1%
Gem
Diamonds
2%
BHP Billiton
7%
Rio Tinto
7%
Alrosa
31%
10