Long break, but yes, I’m still interested in diamonds.
The KP Plenary is being held this week in Luanda, Angola. I’m excited to see what the figures will show for production for 2014. Some things in particular that I’ll be zeroing-in on:
Sierra Leone, Liberia, Guinea
Ian Smillie of the DDI had once directed me to look at the figures of both Sierra Leone and Liberia. Sierra Leone historically has very high-quality (and high price per carat) diamonds, while Liberia generally does not. Evidence that diamonds are being smuggled from Salone into Liberia could therefore be found in a high price per carat, matching or nearly-matching that of neighboring Salone.
This region also has been significantly impacted by Ebola during 2014, and this certainly impacted diamond production, as documented by Estelle Levin Ltd
A certain volume of rough diamonds enters Dubai, and about that same volume leaves Dubai as well. Why then is it, that in between their entrance and exit from Dubai, the diamonds increase in price by ~50 %? This is most likely evidence of under-invoicing and transfer pricing, where the value of a parcel of diamonds is under-stated as it leaves its country of origin as a “tax optimization (wink wink)” strategy. The diamonds are then sold in Dubai at a fair market rate, and the tax savings are sometimes split with a kickback to a corrupt local official. Some might call this “tax optimization”. Others could call it by its more accurate description: “theft”.
Following the dropping of the ban on export by the UN and the KP, in 2014, Côte d’Ivoire re-enetered the diamond market. I’m extremely curious to see what the average price per carat will be, though I’ve been told it’s in line with other Western African countries.
Zimbabwe’s production should be shown to be down sharply as a result of the alluvial diamonds in Marange running out. Almost no good news has ever come from this country’s diamond production, even lately as the 7 companies currently mining in Marange are reluctantly nationalized and merged.Read More