Rockwell “optimistic” on 2013 price growth

[miningmx.com] – ROCKWELL Diamonds, the JSE- and Toronto-listed diamond producer and explorer, said it was “optimistic” about the diamond market in 2013 after buyers showed a willingness to pay slightly higher prices.

“Following weakness during the first part of the year, the diamond market started the
third quarter on a cautious note,” said James Campbell, CEO of Rockwell Diamonds in comments to the company’s third quarter sales note.

“However, Rockwell experienced high level of interest at final tenders for the year, underpinning a willingness to pay slightly higher prices for our product,” he said. “We are optimistic for next year (2013),” he said.

Campbell added, however, that “… the momentum of the market will be largely dependent on strong Christmas sales and further restocking of inventories”. Rockwell posted a 23% increase in third quarter revenue to $7.4m from $6m in the corresponding quarter of the previous financial year.

Volumes were a quarter lower year-on-year but the recovery of high value stones, some of which were 50 carats, or higher, led by a 64% increase in the price per carat equal to $1,821 per carat.

De Beers said in December that its own diamond supply would be constrained in 2013 which would support a possible increase in prices. In an interview with Bloomberg Television, Philippe Mellier, CEO of De Beers, said: “This year we’re going to produce around 27 million, we will be around that number next year.’

De Beers’ 2012 production will be the lowest since 2009 when it slashed output by 50% amid the global financial crisis. The 27 million carats it plans to produce this year represents a 43% decline from its pre-crisis output in 2008, Bloomberg News said.

Campbell said Rockwell had an inventory of 2,704 carats carried forward into the fourth quarter which would enable the company to take advantage of “… any possible restocking trend’.

The lower production was owing to the mothballing of Rockwell’s Tirisano mine which ran into debilitating labour protests. All in all, some 4,043 carats were sold during the third quarter compared to 5,376 carats a year ago.