India’s monetary reform in November 2016 severely affected liquidity conditions in the midstream segment, which is dominated by family-run firms relying on credit to purchase rough stones from miners. India represents only 8% of demand for rough diamonds but is the key centre for stone cutting and polishing, responsible for over 70% of all final product. The market has also been affected by the commissioning of several new mines and the withdrawal of financing by Antwerp Diamond Bank and Standard Chartered.
Nearly one-third of rough stones have a degree of fluorescence; this will continue to attract larger discounts, particularly in Canada.
Belgian bank KBC seeks to recover 26 million euros in unpaid loans, seizing assets from a cutter-polisher in Antwerp; defaults may rise.
Having placed Ghaghoo mine in Botswana on care and maintenance, Gem Diamonds has now put the operation up for sale.
Two recent bankruptcies in India could further cloud banks’ commitment to the sector.
