From Rough to Polished to Consumer: Decisions Along the Value-Chain

[John Pollard]

Maybe it was widespread ridicule associated with this diamond purchase which set in motion LVMH's plan to purchase Tiffany's!

This and @sledge's pancake-eating NSFW clip both made me laugh.

With the Signet mass purchases aspect, would that upstream purchase/order normally be placed with a sightholder directly, or would it be with a manufacturer in India, for instance? Or do larger Indian cutting operations in turn have their own B2B facing partners in Europe, Dubai, and elsewhere that negotiate those deals/volumes as intermediaries?

Integration is bundled. If you were a farmer with resources vast enough to supply most of Kroger's corn it would make sense for you to expand into growing other vegetables, fruits, etc. and sell as much product to your customers as possible. In the jewelry world major diamond producers often parent or partner with major jewelry manufacturers.

 

[Avatar345]

Integration is bundled. If you were a farmer with resources vast enough to supply most of Kroger's corn it would make sense for you to expand into growing other vegetables, fruits, etc. and sell as much product to your customers as possible. In the jewelry world major diamond producers often parent or partner with major jewelry manufacturers.

Is that integrated service for large institutional buyers typically via relationships with the miners themselves directly, or through large aggregators of rough (sightholders, etc)? We had the example of Tiffany's as having secured direct supply/rights through a stake acquisition, and Chow Tai Fook as *being* a sightholder, but I didn't know if those were more the exception to the rule. With the smaller stones used for like random earrings and bracelets and things (the 50,000ctw total you used as an example), the Signet situation, I didn't know if the supply was treated like a commodity more broadly and sourced from whoever has what's cheap and expedient at any given moment.

 

[John Pollard]

As long as it makes business sense - there are probably as many scenarios as you can imagine. Diamond jewelry was a $64.- billion dollar industry in 2020 (even with Covid-19 in force) but the total jewelry market, from luxury to trinkets, is a far larger target. Diamonds drive the bus, but the entities who control diamond rough and jewelry fabrication capacity across a range of quality and price-points can supplement loose diamond sales by serving jewelry clients ranging from icon luxury brands to chain stores and even connected independent jewelers - as long as it makes business sense.

 

[Avatar345]

John before I change gears I just have to say thank you sooo much for your insights - it's just awesome to have some of these gaps filled in terms of what drives certain decisions on the back end way before we the consumer ever end up discussing a certain stone on PriceScope!

To focus on a sort of real-world "right now" business disruption that's coming upon us, I read recently that Indian cutting operations are set to grind to a possible 50% capacity reduction for like a multi-month period, and GIA itself is backed up, as Covid blows up all India-related logistics. What do you think the real world effects of this will be? I imagine the miners will simply hold back rough/supply for a few months while that sorts itself out, but for the players further down the chain, is there enough polished supply in reserve or already in the channel to avoid disruption?

I'll say also that there are certain industries where periods of consumer-facing inventory constraint can produce opportunities for a) price increases, and/or b) the chance to move product that would under normal circumstances not be as appealing. Does a stone graded by IGI sell more rapidly now, or does that "very good" GIA cut stone one couldn't move before find it's way into a jewelry storefront? In any event probably better to be shpping for a loose stone today than three months from now

 

[Garry H (Cut Nut)]

1) THE MINER: Here, mine operators do their thing collecting as many rough diamonds as yields will permit. The majority of said diamonds will be set aside and grouped into similar bundles (is that right?), based on size, clarity, color, etc (how accurate a read on color and clarity are miners able to get?). Many said bundles/inventory will be held back in reserve to meter/time their introduction into the market, but the normal chain of events will see these groups sold to processors and/or dealers of rough. I'll call this normal chain TRACK A. Singular/special finds will be set aside and dealt with on a per-item/auction basis, or likewise held back. I'm thinking about the 30ct vivid pinks or ye old 100ct clear D. That's TRACK Z, for being so special.

I am late to the party, but as a geologist with some experience from cutters and technology - here I go:

The biggest change coming down the line is from LGD's (a term I hate because they are grown in big smelly factories). My friends and I are considering crowd sourcing to raise $10M to drill a prospect in the Gibson Desert West Australia. Investors naturally worry that LGD's will take the bottom of the Mall stores and Walmarts business from NQR diamonds. Those stones we would all po-ho at make up about half the value of mine production. So please contact me if you are interested and have a lazy mill or 3 laying around on 3% earnings - my friends have found more diamond mines and produced more diamonds than anyone in the world. Quality natural diamonds will get more valuable. Open for bets.


XRF technology has resulted in some old unprofitable mines being sold to junior miners who use XRF technology to XRay rocks before and at intermediate crushing stages and extract super large diamonds before they get smashed to bit. This has led to companies like Gem diamonds and Lucara paying say $50 million for a mine and recouping that in a year or two. There is probably 3 to 6x as many +100ct diamonds found every year now compared to 20 years ago.

LGD claims and consumer pressure is leading miners and big smart cutters to identify and track diamonds so we can all know the origin. De Beers is even helping artisinal miners to set this up. Russia and BHP are giving the individual 3D scans (Galaxy and Helium as John mentioned) of diamonds to sightholder buyers so they can make assesments before they buy the stone. This also enables tracking (block chain etc) through the manufacturing process. Several big Surat Indian manufacturers are giving this info now on all or most of their diamonds.

Miners know that octahedral rough +2cts can yield 1.00ct rounds that can achieve GIA XXX so they charge what they can get away with.
Is that evil? Shareholders do not think so. I find GIA more complicit than miners, but miners need to make sure they do not bankrupt the cutters, and in the past they have often behaved badly. Cutters amassed huge debts and that meant they had to keep running like rats in a running wheel. Covid helped for the moment because the Indian Govt stopped importation of rough and that cleared out a lot of back stock and has caused a lot of shortages in the inventory chain. The upper end of the market has stopped spending on travel and luxury sales have been thru the roof!

Fancy shaped diamonds sell for about 2/3rds to 3/4's the price of rounds. As mentioned by others they are slower to sell than rounds. But sizes like 0.80ct - 8.90ct rounds almost do not exist because that rough can almost always yield a 1ct cushion, asscher or princess cut. The difference might be $5,000 for the fancy shape and $4,000 for the round, so as long as your financier supports you it is a no brainer - 1ct fancy it will be!
But bear in mind this is a balancing act - in a financial crisis expect to see more rounds coming off the wheel, when rates are low and money is easy - expect to see more fancies.

 

[Avatar345]

I am late to the party, but as a geologist with some experience from cutters and technology - here I go:

The biggest change coming down the line is from LGD's (a term I hate because they are grown in big smelly factories). My friends and I are considering crowd sourcing to raise $10M to drill a prospect in the Gibson Desert West Australia. Investors naturally worry that LGD's will take the bottom of the Mall stores and Walmarts business from NQR diamonds. Those stones we would all po-ho at make up about half the value of mine production. So please contact me if you are interested and have a lazy mill or 3 laying around on 3% earnings - my friends have found more diamond mines and produced more diamonds than anyone in the world. Quality natural diamonds will get more valuable. Open for bets.

XRF technology has resulted in some old unprofitable mines being sold to junior miners who use XRF technology to XRay rocks before and at intermediate crushing stages and extract super large diamonds before they get smashed to bit. This has led to companies like Gem diamonds and Lucara paying say $50 million for a mine and recouping that in a year or two. There is probably 3 to 6x as many +100ct diamonds found every year now compared to 20 years ago.

Garry thanks so much for chiming in on this one!!

The XRF aspect and the idea of these hyper-targeted mining efforts is incredibly interesting; I've read a bunch of the press releases coming out of Lucara these past few months but didn't realize that they had seen value in someone's previous mine site and bought it out, vs that being a virgin site right off the bat. They have *definitely* done well for themselves in terms of the results, no question.

Are you guys thinking that the prospect site you're staking out might have a similar stone profile to something like Argyle? One or two larger fancy colors would certainly set things up pretty nicely pretty quickly lol!

Fancy shaped diamonds sell for about 2/3rds to 3/4's the price of rounds. As mentioned by others they are slower to sell than rounds. But sizes like 0.80ct - 8.90ct rounds almost do not exist because that rough can almost always yield a 1ct cushion, asscher or princess cut. The difference might be $5,000 for the fancy shape and $4,000 for the round, so as long as your financier supports you it is a no brainer - 1ct fancy it will be!
But bear in mind this is a balancing act - in a financial crisis expect to see more rounds coming off the wheel, when rates are low and money is easy - expect to see more fancies.

Yessss awesome, thank you for this insight!! So what you're saying is that when the rough is in fact just large enough to cross that marker into full ct territory as a fancy shape, vs ending up in that no man's land below it as a round, people will take it to a fancy conclusion and the pricing actually ends up in their favor even with the relative discount for shape. Does that dynamic come up at the other "milestone" ct markers like 2ct and 3ct? And then I guess they simply have to weigh this choice then vs the speed of sale aspect that Karl was mentioning before...

 

[Garry H (Cut Nut)]

Yessss awesome, thank you for this insight!! So what you're saying is that when the rough is in fact just large enough to cross that marker into full ct territory as a fancy shape, vs ending up in that no man's land below it as a round, people will take it to a fancy conclusion and the pricing actually ends up in their favor even with the relative discount for shape. Does that dynamic come up at the other "milestone" ct markers like 2ct and 3ct? And then I guess they simply have to weigh this choice then vs the speed of sale aspect that Karl was mentioning before...

Where have all the 2.9's gone?
Long time passing.
Where have all the 1.9's gone?
Long time ago.
Where have all the 0.98s gone?
The cutters have pushed them every one.
Oh, When will you ever learn?
Oh, they will never learn?

 

[Karl_K]

to sum it up $$$$$$ makes the rules.

 

[Garry H (Cut Nut)]

Are you guys thinking that the prospect site you're staking out might have a similar stone profile to something like Argyle? One or two larger fancy colors would certainly set things up pretty nicely pretty quickly lol!

When you prospect for diamonds you are looking for garnets, diopsides and clinopyroxenes and picloilminite type minerals that form hundreds of miles down where diamonds form. They get picked up by the kimberlite volcanic action and bought to the surface.
There are way more of these and they are softer and do not travel so far. So when you get a lot you know you are near a kimberlite. Then you start looking for micro diamonds. Not big diamonds, because there are always more less than 1mm than all the ones +1mm. Only 1 in 100 kimberlites have any diamonds and then 1 in 1,000 may have enough to be commercially viable.
Most of the soil samples at Webb have diamonds. We have to prove they came from the magnetic targets of which there are 100's in a relatively small area. But they may also have been moved by wind or water from somewhere else.
Here is some rudimentary info - if anyone wants the full geologist reports please contact me.
If anyone knows how to put together a crowd sourcing funding or works in SPAC's we are quite serious.

Diamond exploration and discovery in Australia | GeoCrystal

It would be Ewen Tyler's fourth commercialized Aussie diamond mine and Tom Redicliffes second.

 

[John Pollard]

John before I change gears I just have to say thank you sooo much for your insights - it's just awesome to have some of these gaps filled in terms of what drives certain decisions on the back end way before we the consumer ever end up discussing a certain stone on PriceScope!

You're most welcome. PriceScope is a pretty amazing community and I'm glad to contribute.

To focus on a sort of real-world "right now" business disruption that's coming upon us, I read recently that Indian cutting operations are set to grind to a possible 50% capacity reduction for like a multi-month period, and GIA itself is backed up, as Covid blows up all India-related logistics. What do you think the real world effects of this will be? I imagine the miners will simply hold back rough/supply for a few months while that sorts itself out, but for the players further down the chain, is there enough polished supply in reserve or already in the channel to avoid disruption?

It all happened already. There are still shockwaves to come, but 2020 was crazy.

* Miners 2020

In 1H 2020 many mines stopped producing and went into care and maintenance mode. The most important sellers of rough diamonds took even further measures: De Beers’ allowed clients to defer purchases in their February-sight and canceled their March sight. They held sight #4 but less than 10% was sold compared to DB#4 2019 ($416M). They toured goods around Antwerp, Hong Kong and Dubai prior to DB#5 and eventually launched an online platform but their 2020 was grim. Dominion and Petra had to maneuver things around to keep afloat, as well.

I did mention the pivot Alrosa was able to make in this post.

Miners situation now: The first rough auctions of 2021 have boomed. In fact rough trading in Antwerp in Feb 2021 surpassed that of Feb 2020 (the last month prior to the pandemic) . Summary details in this article.

* Producers 2020

Focusing on India, things got pretty interesting. When the lockdown happened in 2020, the governing Indian diamond-industry body, asked the Indian government to place a ban on rough diamond imports. Let me underscore that - Indian diamond-producers asked their own government to stop rough diamond imports. Why would they do this? Because it allowed them to sell off their existing inventories and reduce company debt-levels. Logically, this hurt the miners the most. To the point where, in May 2020, De Beers’ CEO issued an open letter asking for sales of rough to resume freely as soon as possible. Can you imagine? DeBeers begging customers to buy rough? #2020 #insanity

Producers situation now:

The virus continues to pose challenges. Many factories resumed production during summer 2020 but only at 1/3 capacity. There have been attempted scale-ups but the situation is difficult, overall. This is because many Surat polishers are migrant workers who live in factory dorms. When the lockdown started those workers had to walk back to their home villages - sometimes hundreds of miles away. As restarts have occurred segments of the workforce hesitate to return because the new reality of social distancing creates difficulties in production - you can no longer put several people at a polishing wheel - and in lodging dormitories - you can’t social distance in small living quarters.

Transportability

Couriers and customs workers continue to practice social-distancing, which limits capacity. The last time I checked, diamond producers had to enter a lottery to be placed on the export schedule. I'm unsure if that remains in force.

I'll say also that there are certain industries where periods of consumer-facing inventory constraint can produce opportunities for a) price increases, and/or b) the chance to move product that would under normal circumstances not be as appealing. Does a stone graded by IGI sell more rapidly now, or does that "very good" GIA cut stone one couldn't move before find it's way into a jewelry storefront? In any event probably better to be shpping for a loose stone today than three months from now

Whether accidental or on-purpose (remember, this is DeBeers' we're talking about) reduced consumer demand for diamonds over much of 2020 was matched or exceeded by the shuttering of mines and reduced supply of rough diamonds. Indeed, the resulting equilibrium seems to have stabilized pricing as existing stocks have served consumer demand. In some classes and categories there have been increases, most notably in high luxury and auction items. Signet's holiday sales also broke records coming into 2021.

That's all for now. It's dinner time.

Did everyone notice I left the March 20 Rapaport Sheet out of the narrative above? (I'm behaving myself)

 

[Avatar345]

to sum it up $$$$$$ makes the rules.

Karl what I like about you is that you're not at all jaded, and have a certain joie de vivre... [insert contemplative emoji here]

(By the way this forum needs additional emoji choices!)

 

[Avatar345]

When you prospect for diamonds you are looking for garnets, diopsides and clinopyroxenes and picloilminite type minerals that form hundreds of miles down where diamonds form. They get picked up by the kimberlite volcanic action and bought to the surface.
There are way more of these and they are softer and do not travel so far. So when you get a lot you know you are near a kimberlite. Then you start looking for micro diamonds. Not big diamonds, because there are always more less than 1mm than all the ones +1mm. Only 1 in 100 kimberlites have any diamonds and then 1 in 1,000 may have enough to be commercially viable.
Most of the soil samples at Webb have diamonds. We have to prove they came from the magnetic targets of which there are 100's in a relatively small area. But they may also have been moved by wind or water from somewhere else.
Here is some rudimentary info - if anyone wants the full geologist reports please contact me.
If anyone knows how to put together a crowd sourcing funding or works in SPAC's we are quite serious.

Diamond exploration and discovery in Australia | GeoCrystal

It would be Ewen Tyler's fourth commercialized Aussie diamond mine and Tom Redicliffes second.

No no I understand that the prospecting itself isn't intended to turn up a 30ct fancy red or anything, I was more just asking if based on the geological record there at the site, whether there was any sense of what the "profile" of the targeted/hoped for diamonds might be? But I guess really irrespective of distance/proximity one mine site to another (in this case my associating it with Argyle), each kimberlite vein needs to be taken on its own terms and you just don't know until you know, is that correct?

I wish I could say I've got the millions laying around to contribute to the cause, but I do have some folk in mind that may be interested; I'll raise the prospect [pun intended?] next time I see them!

 

[Garry H (Cut Nut)]

I was more just asking if based on the geological record there at the site, whether there was any sense of what the "profile" of the targeted/hoped for diamonds might be?

I'll raise the prospect [pun intended?] next time I see them!

What comes up from down deep, and what its journey does to the diamonds on the way is unknowable. Argyle for e.g. was found in Lamproite volcano - not Kimberlite. We postulate that it paused long enough for the diamonds to be stressed (hence almost all became colored) and dissolved (hence the very small average size).

Please do get some people for a prospectus (latin? pun?)

 

[Avatar345]

Whether accidental or on-purpose (remember, this is DeBeers' we're talking about) reduced consumer demand for diamonds over much of 2020 was matched or exceeded by the shuttering of mines and reduced supply of rough diamonds. Indeed, the resulting equilibrium seems to have stabilized pricing as existing stocks have served consumer demand. In some classes and categories there have been increases, most notably in high luxury and auction items. Signet's holiday sales also broke records coming into 2021.

LOL that 2020 diamond industry retrospective was worthy of a screenplay adaptation!

Only half-joking suggestion to the PriceScope principals: Pitch a show about launching a diamond mine project in Australia. Pitch it to Discovery. Get the green light for the show, see the funding for the project roll in, and watch the show itself become wildly popular. I myself am a huge consumer of all the Discovery "Gold" related shows. Ok I'm not even half joking now - I'm fully serious. Happy to consult!

To the topic though, what I was wondering with respect to the impending/past/current Indian disruptions... do you anticipate supply thinning out to the point of a supply shock at the retail level at all mid-2020'ish, or is inventory/polished product on hand enough to sort of bridge that gap without too much disruption on the consumer side?

(Can't stop thinking about my awesome show idea...)

 

[Garry H (Cut Nut)]

Only half-joking suggestion to the PriceScope principals: Pitch a show about launching a diamond mine project in Australia. Pitch it to Discovery. Get the green light for the show, see the funding for the project roll in, and watch the show itself become wildly popular. I myself am a huge consumer of all the Discovery "Gold" related shows. Ok I'm not even half joking now - I'm fully serious. Happy to consult!

Taken seriously and proposed to two influential parties.

 

[Avatar345]

Taken seriously and proposed to two influential parties.

Absolutely. The more I think about it...

The thing is it has all the elements. It has the scrappy tight-knit experts with maps and plans. It has the benefit of being an inception arc, which draws the audience in emotionally. It has the benefit of offering a Day 1 educational opportunity for the viewer (I can already imagine the narrators' voice-overs), and it takes place in Australia - where Discovery already has some nominal production operations running. There's going to be excavators and heavy machinery and dust and breakdowns and things right? Millions of viewers.

It's small-scale/intimate crew/friends. English language. Ethical mining in a way people can really *feel*. I honestly think it could be huge for natural diamonds overall, and a real sort of perception shifter for the Western consumer. Side visits to cutters. Side visits to gemological labs. I would watch this thing all day long, and I am not alone. Plus just the credibility you yourself and your crew would bring make it an instant safe bet for a production company.

I live in the DC area not far from Discovery's MD offices - happy to liaise! I know someone that has a producer's info as well, I'll see if they still have it...

 

[Garry H (Cut Nut)]

Argyle, Stuart Kells

The remote Kimberley region of Western Australia has a rich history and unique geography. In the 1960s De Beers, the world's largest diamond company, sent gem-hunters to the area but they came away empty-handed. It was a vast region to survey, and they'd overlooked something vital. A few years...

www.mup.com.au

Ewen Tyler makes up 3/4s of this books stories.
We have to get this going asap as he is about to turn 93.
He is a true statesman and consummate story teller.

Pretty sure the author Stuart Kells would be interested too.

Tom Reddicliffe found the Merlin Mine - a 104ct stone was found before Joe Gutnik bought the mine and has been mining shareholders pockets ever since - and a great side story - www.geocrystal.com.au had near by tenements leased and Tom and Ewen know more about that area than anyone.

 

[Avatar345]

To answer one of my own questions, looks like inventories at least on the miners' side are indeed contracting at a rapid pace:

Diamond stash worth billions sold off after demand roars back

It’s been a rapid turnaround as cutting centers in India and Antwerp rushed to replenish supplies they’d been unable to buy during the worst of the crisis.

www.mining.com

The diamond industry’s collapse last year left the biggest producers with billions of dollars of uncut gems stashed away in safes. Now, in a matter of months, they’ve suddenly found buyers.

The huge stockpile was built up when the diamond world came to a standstill during the height of the pandemic, stoking fears that gems amassed by the biggest miners could hurt the sector for years. But rampant demand from the middlemen who cut, polish and trade stones has all but wiped out the stash — and remarkably as top producers De Beers and Alrosa PJSC raised prices.

It’s been a rapid turnaround as cutting centers in India and Antwerp rushed to replenish supplies they’d been unable to buy during the worst of the crisis. At the same time, demand jumped amid surprisingly good festive sales, with consumers unable to book vacations spending more on luxuries such as gems.

De Beers this week said it sold 13.5 million carats of diamonds in the first quarter, almost double the amount it mined in the period, signaling stock drawdowns. While the No. 1 miner doesn’t report inventories, it indicated to customers in recent weeks that stockpiles have returned to normal levels, according to people familiar with the matter who asked not to be identified. The company declined to comment.

Russian miner Alrosa’s inventories tumbled about 60% in six months to 12.8 million carats by the end of March, the lowest in almost three years...

John you nailed it in your earlier reply of course

I honestly am surprised that diamond/jewelry sales could have been so strong in mid-pandemic with the majority of jewelry stores in wealthy cities shut down, excess vacation funds or no lol - shocking almost! The aggressive bounce-back post-pandemic is less of a surprise though for sure, and with reduced global carat weight mine output on an absolute basis into 2021 and beyond, this should almost be the formation of a new floor in inventories (if not down even further from here), no?

 

[Garry H (Cut Nut)]

To answer one of my own questions, looks like inventories at least on the miners' side are indeed contracting at a rapid pace:

Diamond stash worth billions sold off after demand roars back

It’s been a rapid turnaround as cutting centers in India and Antwerp rushed to replenish supplies they’d been unable to buy during the worst of the crisis.

www.mining.com

The diamond industry’s collapse last year left the biggest producers with billions of dollars of uncut gems stashed away in safes. Now, in a matter of months, they’ve suddenly found buyers.

The huge stockpile was built up when the diamond world came to a standstill during the height of the pandemic, stoking fears that gems amassed by the biggest miners could hurt the sector for years. But rampant demand from the middlemen who cut, polish and trade stones has all but wiped out the stash — and remarkably as top producers De Beers and Alrosa PJSC raised prices.

It’s been a rapid turnaround as cutting centers in India and Antwerp rushed to replenish supplies they’d been unable to buy during the worst of the crisis. At the same time, demand jumped amid surprisingly good festive sales, with consumers unable to book vacations spending more on luxuries such as gems.

De Beers this week said it sold 13.5 million carats of diamonds in the first quarter, almost double the amount it mined in the period, signaling stock drawdowns. While the No. 1 miner doesn’t report inventories, it indicated to customers in recent weeks that stockpiles have returned to normal levels, according to people familiar with the matter who asked not to be identified. The company declined to comment.

Russian miner Alrosa’s inventories tumbled about 60% in six months to 12.8 million carats by the end of March, the lowest in almost three years...

John you nailed it in your earlier reply of course

I honestly am surprised that diamond/jewelry sales could have been so strong in mid-pandemic with the majority of jewelry stores in wealthy cities shut down, excess vacation funds or no lol - shocking almost! The aggressive bounce-back post-pandemic is less of a surprise though for sure, and with reduced global carat weight mine output on an absolute basis into 2021 and beyond, this should almost be the formation of a new floor in inventories (if not down even further from here), no?

Old news.
Surat polishing center is seeing a mass exodus of skilled craftspeople leaving to return to their villages.
Expect to see factory closures.
The industry is lobbying govt to stop importation of rough.
Expect to see prices rise again.

The bigger risk is that there are now so many cases that mutated virus's are themselves mutating. Vaccines may not work!

 

[whitewave]

@Avatar345 i haven’t been in over a year because I had my knees replaced, but if you are in the states, I go to the Crater of Diamonds mine in SW Arkansas. I’ve been about 8 times and haven’t found anything yet (except slivers of chrome diopside and spinel).

the place has great energy and is my happy place. I have a thread or two on rocky talky about it

 

[Avatar345]

Old news.
Surat polishing center is seeing a mass exodus of skilled craftspeople leaving to return to their villages.
Expect to see factory closures.
The industry is lobbying govt to stop importation of rough.
Expect to see prices rise again.

The bigger risk is that there are now so many cases that mutated virus's are themselves mutating. Vaccines may not work!

Garry do you think that cutting activity will start to shift from India at all as a result, or is this a multi-month disruption that the entire industry will just have to endure?

And if some cutting operations are permanently shuttered, will that create a lag in ramping capacity back up even after things subside there?

 

[Garry H (Cut Nut)]

Garry do you think that cutting activity will start to shift from India at all as a result, or is this a multi-month disruption that the entire industry will just have to endure?

And if some cutting operations are permanently shuttered, will that create a lag in ramping capacity back up even after things subside there?

Not a chance. The resources required make it very difficult to move. There is a lot of benefit in centralized centers. De Beers and Botswana keep a small % of their output for local cutting and established some factories there. Several Indian and Israeli firms operate there, but I never heard that there were any companies planning expansion.

Only reason to close is bankruptcy. Most firms are stronger because of Covid and having sold down inventory.