De Beers sells R9.87bn of diamonds at auction

London - De Beers completed a fourth offering of rough diamonds this year, signaling a stronger-than-expected demand during what is usually a weaker quarter.

The company, controlled by Anglo American [JSE:AGL], sold $630m (R9.874bn) worth of diamonds in May, it said in a statement on Tuesday. That’s down from a revised $666m (R10bn) from the previous sale, but up from the $545m (R8bn) in January. While demand for rough diamonds tends to slow in the second and third quarters of the year, prices suggest demand continues to improve, according to Investec [JSE:INL].

“We’re already into the second quarter and diamond sentiment still remains pretty good,” Jeremy Wrathall, head of global natural resources in London at Investec, said by phone. “It is a positive surprise that the rough market is still restocking.”

Last year, slowing Chinese demand and an industry credit crunch forced the company to lower prices about 15%. De Beers and rival Alrosa PJSC responded by cutting off supply to try to support the market.

“As normal seasonal trends return to the market, we are encouraged by the continued stability of demand for rough diamonds shown in the fourth sales cycle of 2016," chief executive officer Philippe Mellier said in the statement.

Anglo shares rose as much as 2.8% to R140 in London trading, and traded 1.9% higher at R138 at 11:32. The stock has more than doubled this year. De Beers, which doesn’t reveal details of its diamond auctions, offers diamonds at 10 sales a year known as sights.