The current malaise in the diamond industry is serious, but it will pass, De Beers Group chief executive officer Bruce Cleaver (pictured) tells JCKfollowing the recent release of the company’s financial results.
“I’m not going to pretend it’s easy, because it’s not right now,” Cleaver says. “The midstream is being buffeted by a series of things that is making it tough for them. There is an oversupply of polished in the midstream, less restocking.”
Still, he’s hopeful that the industry will pick up when demand does.
“I don’t want to underestimate how difficult it is in the midstream right now, but there is a psychological element to this,” he says. “If we get a good season, this will pass.”
One big issue is liquidity, with lenders still reluctant to finance diamond businesses, as demonstrated by a recent letterfrom ABN Amro that said it will no longer underwrite certain rough purchases.
“That letter wasn’t particularly helpful,” Cleaver says. “The strong businesses in the industry are going to have to find new sources of funding. There is no question that liquidity has grown tighter, and that is causing people to make sales they wouldn’t ordinarily make.”
De Beers is trying to work with its clients to get them back on their feet, and it has cut its second-half production targets, he notes.
