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13 june 2022

david_johnson_xxn.pngDe Beers recently signed two mining investment contracts (MICs) with the Angolan government for licence areas in the provinces of Lunda Norte and Lunda Sul.

The MICs for the two licence areas are for the award and exercise of mineral rights covering all stages of diamond resource development, from exploration to mining, and span 35 years.

Each concession area will be held by a separate new joint venture company formed by De Beers Group and Endiama, Angola’s state-owned diamond company.

De Beers will hold a substantial majority in the new companies, with Endiama having the ability to incrementally increase its equity share over time.

De Beers spokesperson David Johnson told Rough&Polished’s Mathew Nyaungwa in an exclusive interview that they are returning to the southern African country where they maintained a residual presence since 2014 because they see good potential for exploration activities coupled with substantive reforms introduced in the local diamond sector.

He also commented on the recently rolled out Tracr platform saying provenance had been an area of growing importance in the diamond industry in recent years.

This, he said, has been amplified and accelerated by the geopolitical events of 2022.

Below are excerpts of the interview.

De Beers recently signed two mining investment contracts with the Angolan government to prospect for diamonds in the provinces of Lunda Norte and Lunda Sul. Why are you returning to Angola?

Angola is one of the most prospective countries for diamonds globally and consistent reforms by the government have created a more stable operating environment, enhancing Angola's attractiveness as a business and investment destination. We look forward to helping progress the development of the country's diamond sector and having the opportunity to support meaningful national development. We will go into the country with the same operational and ethical standards that we apply for our activities around the globe, aligned with the OECD Due Diligence Guidelines on Responsible Supply Chains. With our recognised Building Forever framework for creating lasting positive socio-economic impact for communities, our innovative FutureSmart Mining™ approach that holds exciting potential for a transformation in mining technology and the promise of a significantly reduced mining footprint, and our proven track record of establishing responsible and mutually beneficial partnerships in the region, we look forward to renewing exploration activity in Angola.

What is your take on the reforms implemented by Luanda as far as the mining industry is concerned?

Angola's Government has implemented substantive and consistent reforms that enable the nation's diamond endowment to underpin transformative socio-economic growth for communities. Diamond marketing regulations are being amended to increase transparency, including the use of outside (third-party) diamond valuators and the introduction of a Diamond Bourse, while a new governance model for the mineral resource sector has been implemented with the creation of a National Agency for Mineral Resources (ANRM) to oversee all commodities and diamonds. We see these as positive steps that support the development of a conducive environment for operations.

How optimistic are you about finding commercial deposits in the country?

Angola remains one of the most prospective countries globally for diamonds and our initial assessments imply a good potential for exploration activities.

When are you expecting to commence work in Angola?

We aim to commence exploration activities later this year.

What has been the net effect of the sanctions imposed on Alrosa and the COVID-19 lockdowns in China on diamond prices? 

De Beers Group does not comment on diamond prices outside of its full-year and half-year financial results.

What has been the leading cause of high demand for diamond jewellery? 

Diamond jewellery demand trends have resulted from many factors, including the marketing approaches undertaken by the industry in recent times, the fact that diamonds have something important to say in our lives at a time of uncertainty and when people want to express the importance of their connections, the increased online retailing of diamonds following the pandemic, the reduced demand for experiential luxury such as luxury travel recently, pent up wedding demand following Covid-19 lockdowns, and fiscal stimulus provided to US consumers throughout the pandemic. Nonetheless, it will be important for the industry to continue to focus on generating demand as there are also several risks, such as the ongoing impact of Covid-19 lockdowns in China, and the impact of sanctions resulting from the Russia-Ukraine war, and the inflationary economic environment.

De Beers recently rolled out the Tracr platform. How important is this diamond provenance blockchain?

Provenance has been an area of growing importance in the diamond industry in recent years, and this has only been amplified and accelerated by the geopolitical events of 2022. As such, a platform such as Tracr that can provide source assurance at scale, supported by leading technology, is particularly important. We will continue to develop and enhance our provenance work in the near future – the current focus is on providing a B2B solution to meet the industry’s immediate need, but we see provenance becoming increasingly important for consumers, so we will be working hard on evolving our approach so that the Tracr technology underpins the ability to deliver rich, digitally-enhanced storytelling to consumers about the uniqueness and positive impact of their diamond.

How many carats of diamonds will you be able to track on this platform per year?

Currently, we are uploading all our 4 grainer and larger boxes to Tracr before selling them via Global Sightholder Sales, and we will continue to scale the platform up through the year.

What else does this platform offer apart from diamond traceability?

The current focus for Tracr is on providing B2B source assurance, as this is the immediate industry need. Ultimately, Tracr will be the backbone that supports De Beers Group's B2C provenance offering, connecting consumers to the positive impact that their diamond has helped create for people and the planet, through rich, digitally-enabled storytelling.  Beyond this, the Tracr technology platform can function as a digital backbone for its participants and has the potential to offer a range of other business intelligence benefits in the future, including through a range of apps that could be built on the platform.

The pilot programme of Tracr was first announced at the end of 2017. Why did it take longer to fully launch the platform? 

The Tracr platform uses a range of new and advanced technologies and is focused on solving complex challenges in a way that meets specific industry needs. As a result, it was important to ensure that the technology development and testing of the practical application of the platform were undertaken before putting it in a live environment. Following such a pilot period, we are now very pleased to have begun the deployment of the platform at scale in the knowledge that it has been thoroughly tested.

Mathew Nyaungwa, Editor in Chief of the African Bureau, Rough&Polished