Corona Daily 353: Diamonds Are Not Forever

Amongst other things, coronavirus has shaken the global diamond industry. Mines from Africa to Canada were shut for months. Diamond shows were cancelled. With the decline in sales, Alrosa and De Beers, the two top diamond miners, have a large inventory. Cutters, polishers, traders, everyone is carrying large stocks. The Argyle mine in Western Australia producing 10% of the world’s diamonds is the source of the rarest, costliest gems: pink, purple and red diamonds. Its owner, Rio Tinto, announced Argyle will close for ever by the end of this year. Prices for rough diamonds have declined by 15% to 27%.

In February, India imported $1.5 billion worth of rough diamonds. In April, only $1 million. By June, India’s imports were down by 52%, and exports of polished diamonds by 40%. The Russian state- controlled Alrosa’s second Q net profits fell by 98% year on year. Its sales in carats shrunk by 92%. Banks are reluctant to continue credit lines. ABN-Amro was the latest bank to scale down financing, citing lack of profitability.

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This scary scenario has in no way affected the most expensive diamonds. The super-rich of the world, bored at home, are participating in online jewellery auctions.

In April, Sotheby’s sold the Cartier Tutti Frutti bracelet, made of sapphires, rubies and emeralds in a platinum setting of diamonds, onyx and enamel for $1.34 million. The twelve online sales generated $20 million. In June, Christies succeeded in selling a 29 carat VVS1 white, emerald-cut diamond ring for $2 million. Auction houses are providing private Zoom viewings and offering guidance on phone and online. The Doyle auctioneer works live (rather than from home) to give the auction authenticity.

Most buyers are women. Irina Maleeva, 60, an actress living in Beverly Hills feels bidding at the jewellery auctions is like men playing football. In May, Doyle sold $800,000 online that included a $5000 Tifffany Angela Cummings gold rose-petal bracelet bought by Ms Maleeva. Ms Maleeva’s previous purchase of a multicoloured white gold, moonstone, sapphire and diamond bracelet cost over $16000.

“I like to wear things that have an impact.” She said.

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An unnamed buyer has ordered an 18-karat white gold mask decorated with 3600 white and black diamonds and fitted with top rated N99 filters. Designed by Isaac Levy, an Israeli jewellery company is working on it. This most expensive coronavirus mask with gold and diamonds will cost $1.5 million.

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The diamonds in Ms Maleeva’s bracelets and in the $1.5 million mask were probably polished in Surat, an Indian city. 90% of the world’s natural diamonds are cut and polished in India. In Surat, third and fourth generations of specialized craftsmen are in this business. Nearly 750,000 workers are employed in some 5000 diamond factories, most of them private and unorganized.

Once India’s strict lockdown shut factories, the migrant workers left Surat. Typically, four diamond workers sit around one emery wheel, close to each other. Social distancing is not possible. Over 700 workers were infected, causing repeated shutdowns. Out of the 200,000 workers left in the city, 50000 are now unemployed. A diamond worker’s average monthly salary is $200-$270, but those still employed are paid half of that.

Bharat Sarvaiya, 42, was one of seven diamond workers who committed suicide. In June, Mr Sarvaiya hanged himself while his wife and two sons were in the outer room. His wife, when interviewed said she thought it was ironic that workers polishing diamonds, one of the most precious gemstones, should end their lives because of impoverishment.

Ravi