/ 14 November 2006

Diamond prices seen moving sideways or up

Lewellyn Delport, chief executive of Trans Hex, says he sees diamond prices moving either sideways or up depending on the demand over Christmas and the perception of the industry created by a Hollywood movie in coming months.

“We are mindful of the issues like the Blood Diamond film’s effect on Christmas sales,” said Delport in a conference call for the company’s half

year results announcement.

Blood Diamond stars Leonardo DiCaprio as a diamond smuggler, and involves the trade of conflict diamonds. The industry is worried that the movie will create a negative image, even though it is set before the Kimberley Process was created, a process that governs the trade of diamonds.

In the six months to end-September rough diamond prices were 8% lower compared to the corresponding period, according to the Trans Hex results announcement.

On Friday on a trip to the Orapa diamond mine in Botswana, Eli Ishakoff, chairperson of the World Diamond Council, told the media that he saw an improved 2007 for the diamond industry.

“I am very optimistic for this Christmas,” Ishakoff said.

Earlier in the year diamond producer’s bought up too much supply, inflating their debt positions.

“There was a bit of speculation [of higher prices] in the pipeline,” said Ishakoff and so cutters stocked up, resulting in less demand in later tenders.

Trans Hex says it is also cognisant of these issues.

“Liquidity and profitability issues in the downstream diamond industry continue to cause concerns and may continue to negatively affect diamond prices.”

Izhakoff said consumer demand for diamonds was still very strong. – I-Net Bridge