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DIAMOND INTELLIGENCE BRIEFS

A Confidential Service for

Executives in the Diamond and Diamond

Jewelry Business

22 March 2012 | Vol.27 No.701

India’s New Tax Measures May Impact Global Diamond Demand

With diamond jewelry demand booming in India, the phenomenal rise of domestic consumption has somewhat compensated for the decline in diamond jewelry demand in the traditional markets, especially the United States. However, consumer spending in India might soon come under great pressure, especially as the government has declared war on India’s “black economy” and is heavily taxing gold imports. The government plans have triggered a nationwide strike of the jewelry stores that first closed three days ago and has since been extended by another two days following the government’s refusal to budge.

The new regulatory and taxation measures announced by Finance Minister Pranab Mukherjee in India’s 2012-2013 budget proposal will have the effect of temporarily reducing GDP growth, which ran from its annual 8.4 percent level (recorded for the last two years) to 6.9 percent (this year). This 6.9 percent may now decline further with the implementation of the new measures. Originally, it was believed that GDP still may rebound to some 7.4 percent in the new (2012-2013) tax year, but now analysts aren’t certain anymore.

India’s ‘Black Economy’There are economic realities that, at times, are conveniently ignored. The

By Chaim Even-Zohar

DIAMOND INTELLIGENCE BRIEFS 7158

EDITORIAL

black economy in India is conservatively estimated at anywhere between 40-50 percent of the country’s total GDP. Indian professor of economics Arun Kumar, author of many studies on the subject, has given the higher 50 percent estimate. The 40 percent figure is more in line with the consensus view.

India’s GDP has recently reached a record US$1.79 trillion (about 2.8 percent of global GDP), and if the country’s annual black economy is measured at “only” 40 percent of this figure, it holds some US$700 billion. This isn’t a recent phenomenon. In 2006, a Swiss Banking Association report noted that “India has more black money than the rest of the world combined.” It is this

“black money” that has made India the largest gold importer in the world, with some 970 tonnes of gold imports in 2011, over half driven by jewelry demand.

Within the tax measures, the announced doubling of the import duty on standard gold from 2 percent to 4 percent and for non-standard gold from 5 percent to 10 percent is expected to lead to a reduction in gold imports “by over 30 percent,” according to Prithviraj Kothari, President of the Bombay Bullion Association. Kothari also expressed fears that the new import duties “will lead to imports through illegal channels.” In this respect, India will go back to the past. Some analysts believe that the duty hike in gold may trigger an appreciation of the rupee.

Though the policy measures concentrate on gold, the diamond business will nevertheless be impacted as well. Moreover, a growing part of diamond exports are part of set jewelry.

1% Tax on Cash TransactionsTo fight black money, the Indian government has introduced

quite a novel concept: a tax on cash transactions. All transactions over the rupee equivalent of US$4,000 will need to be carried out by check or by credit card. If cash is utilized, the retailer (i.e., the recipient of the money) must add 1 percent, which the retailer (or recipient) will take as “Tax Collected at Source.” The retailer

is supposed to give the consumer a certificate that enables him to claim the tax when filing tax returns at the end of the year.

It isn’t clear how the government envisions the implementation of this added cost to the consumer, but chances that the consumer will actually pay this tax (and thus also identify himself to the retailer) seems doubtful.

Indian commentators believe that the new measures will drive black money away from domestic diamond and gold jewelry consumption. It will impact some jewelry exports as well, as the final products will become more expensive. As India retains its low-labor-cost advantage, it remains to be seen whether this decline in exports will actually materialize.

Imports Cheaper than Domestic Manufacturing

Mumbai-based charted accountant and board member of the Bombay Bullion Association Bhargava Vaidya has quite a few reservations about the new measures. “The doubling of duties on gold from 2% to 4% in the Union budget means importing gold jewellery directly from select countries will be cheaper than buying gold in India. For instance, duty on gold jewellery imported from Thailand is just 1% because of India’s free trade agreement with the country. Nations with which India has such treaties will benefit if such differential duties persist,” said Vaidya.

“Thailand is known for its jewellery manufacturing operations. Other nations such as Malaysia could also benefit,” he added.

“There has been no incentive for large jewellery imports previously but one will have to study the impact of recent increases in the duties starting two months ago,” he said, fearing huge job losses for the sector if matters are not rectified. According to a local newspaper, DNA, quoting Rajiv Popley, director of Popley & Sons, there could be a review on the duties on imported jewellery. “The Finance Minister would not create a situation where domestic jewellery is more expensive than the imported,” Popley said.


EDITORIAL

The ‘R’ Word Uttered in Budget SpeechWhen announcing the imposition of a 2 percent import tax

on colored stones, Finance Minister Pranab Mukherjee actually mentioned the word “roundtripping,” the practice of securing multiple credit facilities through repeating exports of the same goods. A similar tax on polished diamond imports was imposed in January.

Insiders assert that the impact of the 2 percent import duty on polished diamonds and colored stones can be negated if one routes such imports and exports through India’s Special Economic Zones (SEZs) where there is no import duty. These SEZs are supposed to be only for manufacturing, but there have been many instances where companies mainly used these zones for trading purposes – especially in gold.

Declaring Worldwide IncomeFalling in line with the United States and many other countries,

the Indian minister announced that every resident having any asset located outside India is required to declare the income earned from these assets, irrespective of whether the resident has taxable income in the country or not. As it may take time for Indian tax officials to “discover” undeclared foreign assets, the time framework for issuing a notice for re-opening an assessment on income from non-Indian assets has been extended to 16 years.

According to tax lawyer Rohan Shah, these measures “will have far-reaching effect wherein any resident even acting as a trustee or a beneficiary of an Offshore Trust will be mandatorily required to file a return of income, irrespective of whether the resident has any taxable income in the country.”

Disappointment in Official Industry CirclesThe “tax web” has been widened, and the imposition of a

Minimum Alternate Tax on individuals and partnership which hitherto had not been taxed will have an effect on the diamond sector. The Chairman of the Gems and Jewellery Export Promotion Council (GJPEC), Rajiv Jain, was clearly disappointed. “Our demand for the turnover tax has not been considered and the existing uncompetitive tax environment is driving investments away from India. Additionally, the measure of increase from 2-4% duty announced will lead to corrupt state of affairs due to increased probabilities of trafficking of gold into the country through illegal channels,” said Jain.

Though most of the large diamond and jewelry concerns in India are today transparent and accountable, and many of the anti-black-money measures there are not relevant to them, the overall industry’s fiscal environment has undoubtedly become more challenging.

The GJPEC’s chairman hints that the taxation steps that have been discussed with industry seem to have been ignored – in favor of measures that might drive the industry “underground,” back to a less glorious past. India’s government seems to ignore that there are often jurisdictions – such as Dubai – ready to provide perfectly legal and transparent options. Moving beyond India’s local fiscal and regulatory environment, any significant reduction in diamond jewelry consumption in that growing market is something that affects us all.♦

By: Sanjiv Arole , Anaylst

The Price of Gold Roundtripping In the Indian diamond industry’s “roundtripping” tale, the elected representatives of the sector, the Gems & Jewellery

Export Promotion Council (GJEPC), discussed with government ways to curt it – and successfully so. After all, there were only a few players that put the entire sector unjustifiably in a negative light.

The Indian gold industry, in contrast, had to learn its lesson the hard way. The rampant roundtripping in gold to around 20 percent of the gross imports ultimately resulted in the high dosage of taxes and duties on the trade. Just because of a handful of players who indulged in the practice, the entire trade, as well as the consumer, is saddled with a higher duty and tax structure. It may negate the gains made by the trade in pushing forward the reform process. Let’s hope that the Indian government will decide to deal with the culprits rather than punish the industry and the consumer.

V IEWPOINT

Rajiv Jain

Indian Finance Minister Pranab Mukherjee


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Zimbabwe Diamond Revenues Underperforming, Says Finance Minster

Diamond revenue shortfalls have continued to cripple Treasury’s capacity to fully fund the Zimbabwe government, according to public statements made by Zimbabwe’s Finance Minister, Tendai Biti.

Biti told journalists last week that diamond revenues for February totaled US$5 million compared to a projected US$41.5 million, according to a statement

released by the Office of the Prime Minister of Zimbabwe, Morgan Tsvangirai. In his monthly state of the economy address, Biti noted that the actual revenue

collections for January and February 2012 amounted to US$488.24 million, compared to a projected target of $549.5 million, implying a cumulative deficit of US$61.24 million, largely emanating from under-performance of diamond revenues, according

to the statement.Biti said this had affected the performance of

government, as the US$4 billion 2012 budget had some projects largely depended on diamond revenue.

“We are being crippled in our capacity to fund government fully because of the under-performance of diamonds,” he said, as quoted in the statement.

According to Biti, it is going to be difficult for the government to fund capital projects if the expected annual diamond revenue of US$600 million was not realized.

Last month, after concluding a tour of the Marange diamond operations, the Prime Minister called for

transparency in the mining and marketing of diamonds and that revenue be channeled through Treasury to ensure equal distribution of all government departments. He added that government will only be able to pay civil servants market related salaries if diamonds revenues are accounted for through Treasury.

Zimbabwe Orders Mining Firms to Deposit Export Earnings in Local Banks

Zimbabwe has ordered foreign mining firms operating in the country to deposit their export earnings with local banks, as a way to address the economy’s dollar shortage, media sources report.

According to Mines Minister Obert Mpofu, last week cabinet decided to tell foreign-owned mining companies to bring back earnings from their

Zimbabwe operations that were deposited in offshore accounts, reports Reuters citing Zimbabwe’s Sunday Mail.

Zimbabwe’s unity government has managed to stabilize the economy, which grew by 9.3 percent in 2011 and is set to grow by a further 9.4 percent this year according to official figures, but the country is battling an acute dollar shortage, according to the Reuters report.

Zimbabwe adopted the use of foreign currencies, mostly the US dollar and South African rand in 2009, after its own currency unit was destroyed by hyperinflation that reached 500-billion percent in December 2008.

Rio Tinto is one such foreign mining company that holds a 78 percent share in the Murowa diamond mine in South Central Zimbabwe.

Report: Sierra Leone to Form a National Minerals Agency

A new corporate body is about to be established in Sierra Leone that will be responsible for managing the administration and regulation of the country’s mineral rights and mineral trading, reports

the Concord Times, citing the draft of a bill presented to parliament last week.

In his presentation, Minister of Mines and Mineral Resources Alhaji Minkailu Mansaray said the purpose of the new entity, reportedly to be called the National Minerals Agency, would be to assist the Ministry of Mines and Mineral Resources in reaching its goal of developing and sustaining the country’s minerals sector. The new agency will focus purely on the implementation of the 2009 Minerals Act related to the trade in minerals and associated matters, reports the news source.

The Agency "will formulate and implement plans and systems for managing the responsible development of the minerals sector and will promote the rights of communities. It will also advise the minister on policy matters related to mining and natural resource governance, whether or not arising from any law referred to the 2009 Minerals Act,” the minister said, as quoted by the news source.

The move follows another government initiative to improve transparency in Sierra Leone’s mining industry. In January a website was created that publishes mining company revenues online as well as payments made by large and small miners and the status of licenses and applications.

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Finance Minister Tendai Biti

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Minister of Mines Obert Mpofu



Below is the list of items to submit to Botswana’s Minister of Minerals, Energy and Water Resources when applying for a Diamond Cutting & Polishing license:

• Application form 1 (Section 6 and regulation) of the Diamond Cutting Act

• Certificate of incorporation in Botswana• Certificate of shareholders• Company Structure including parent

company• Business plan• Financial Credentials• Audited Financial Reports –past 3 years• Rough supply agreements/proof of

continuous rough supply• Affidavits proving no criminal records

from company Directors• Declaration of any previous, ongoing

or anticipated litigations• Proof of no prior records of Bankruptcy

in the past 10 years

Business PlanJust as with De Beers’ Supplier of

Choice and the requirements of other producers, Botswana demands a detailed

business plan from license applicants. The following list is by no means exhaustive, but rather a guideline of bare minimum requirements:

• Company profile, history, growth plans and future projections, (rationale on projections)

• Business model ◦ Core business activities (company’s position on the diamond value chain)

◦ Key strengths of the company ◦ Complete integration of cutting and polishing with jewelry manufacturing set up (will be an added advantage)

◦ Provisions for local equity participation with capacity building programs for local shareholders (will be an added advantage)

◦ C l e a r d e v e l o p m e n t a n d implementation plan with time lines and measurable milestones

◦ Clear Training and skills transfer programs

Financing PlanBelow are financing guideline

requirements:• Availability of funds to execute the

project• Breakdown of equity, and borrowings/

loans required• Consideration for local financing will

be a plus• Financial projections for the first 5 years

(group financial analysis)• Complete 10-year financial model• Outl ined capital requirements-

machinery, buildings, working capital• Financial reports; a minimum period of

past three financial years.• Balance sheet, Profit and Loss, and

Cash flow Statements all signed off by independent auditors.

• Letters of credentials (financial capability) from financial institutions/ banks are required.

Rough Diamond SupplyApplicants must show certified proof

of continuous supply of rough diamonds.The minister requires detailed sourcing

of rough diamond supply:• Current and projected• Degree of dependence from certain

suppliers, availability of alternative back

Botswana Lifts 5-Year Ban on Issuing Licenses to Diamond Cutters, PolishersBotswana’s government has announced that it has lifted the five-year moratorium it had placed on issuing licenses for

new diamond cutting and polishing firms with effect from April 1, 2012. At the same time, the Ministry of Minerals, Energy and Water Affairs has issued new guidelines for license applications

(see below). The Botswana government halted issuing new licenses in June 2007 due to growing concerns that an increase in the number

of domestic diamond manufacturing firms at that time would complicate regulation and undermine healthy competition within the country’s new downstream diamond industry, according to the news source. The ban was instituted following the issuance of 14 new licenses in 2006, prompted by the historic agreements between government and De Beers establishing diamond sales within the country.

Revoking the suspension on awarding diamond processing licenses is part of the government’s plan to develop the country’s downstream diamond industry and transform Botswana into one of the world’s leading diamond hubs.

Because of the growing intent among the downstream players to become part of the Botswana diamond scene, we hereby provide a summary of the relevant guidelines:

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DIAMOND CUTTING & POLISHING LICENSE APPLICATION GUIDELINES

Diamond Processing in Botswana

Botswana Minister of Minerals, Energy

and Water Resources Ponatshego Kedikilwe



up sources » Detailed rough requirements-all in line

with development plans ◦ Assortments (average sizes, cuts, colour, clarity)

◦ Quantities ◦ Value $ ◦ (Rough requirements should reflect understanding of type of goods offered and their availability)

» Productivity models ◦ Ideal Inventory levels & inventory l o c a t i o n s - ( o n p r e m i s e s , o n consignment etc) allowances for seasonal fluctuations etc

◦ Key composition of company’s stocks ◦ Inventory rotations (projected) ◦ Control of flow of goods

» All key rough preparation and productions processes to be done on site ◦ Critical production or operational stages likely to be problematic

» Staffing ◦ Current number of employees in existing operations if any (with location), expected work force size, anticipated problems with recruitment

Distribution and Branding » Distribution channels and marketing

strategies ◦ Geographical coverage of sales, ◦ Marketing vehicles,

◦ Efficiency of distribution methods and channels (cost, coverage and performance)

» Branding ◦ Provision for reflecting the local industry traits and uniqueness-sell Botswana

◦ Target markets ◦ Geographical spread ◦ Current Market share ◦ Key trends and anticipated changes within target markets

◦ Major factors affecting market growth-(industry trends, economic trends, government policy etc)

» Key Clients ◦ Company’s main clients ◦ Terms of sales-consignment/memo programs, maximum credit given to clients any given time

◦ Current and projected client rotation

Technical Expertise• Cutting edge technology• Experience in the industry• Innovations• Research and Development

License ChargesLicense applicants should be aware

of a charge of P100.00 (US$13.60) upon issuance, then annually on the anniversary of the license of issuance. There is also a submission of Statutory Returns before the

Jacob Thamage Appointed Chairman of Okavango Diamond Trading Company

In September 2011, Botswana and De Beers signed a new ten-year marketing contract, which stipulates that the DTC will transfer the sorting, valuing and selling of rough diamonds from London to Gaborone by the end of 2013. The agreement also provides for Botswana to sell 10 percent of its diamonds independently of De Beers, rising to 15 percent in five years’ time, through a newly formed private trading company called Okavango Diamond Trading Company.

Jacob Thamage, Coordinator of Botswana’s Diamond Hub, has been appointed Chairman of Okavango.

To read more about the new trading company, click here: http://tinyurl.com/6uxv4lm

GIA Provides $25K Education Grant to University Of NairobiThe Gemological Institute of America (GIA) has provided an education grant valued at US$25,000 to the University of

Nairobi (UoN) in Kenya. The grant and a Memorandum of Understanding between the institutions enable 20 individuals in the East African country of Kenya to enroll in GIA’s Accredited Jewelry Professional intensive (AJPi) program.

UoN, the only institute of higher learning in Kenya, will select 20 individuals from the applicant pool. The five-day class will be held on the UoN campus. GIA will provide the instructor, curriculum and materials.

The three-course AJPi program teaches polished diamond quality; how to translate jewelry design, style and manufacturing features into consumer language; the basics of colored stone identification; how to explain treated, synthetic and imitation stones with full disclosure; and jewelry selling techniques.

“We are thankful for GIA’s support to expand gemological knowledge in our community,” says Prof. Norbert Opiyo Akech of UoN. “This is a beneficial collaboration that will equip our local residents with the knowledge to further understand gems and jewelry, which directly relates to and adds value to the mining industry in Kenya.”

Donna Baker, President and GIA Chief Executive Officer, adds: “Our organizations share the goal of better serving local residents of Kenya by fostering the discovery and transmission of gem knowledge, and the stimulation of life and cultural development.”

In addition to Kenya, the GIA operates an education campus and laboratory in Botswana and a laboratory in Johannesburg, South Africa. In addition, the GIA offers diamond, colored gemstone and jewelry arts education at other facilities in Africa.

15th of the month following that it relates to: employment records, production records with associated production costs, and record detailing the previous month’s transactions (form 6: section 22 and regulation 10).

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http://tinyurl.com/6uxv4lm



At a festive dinner this week in Tel Aviv, the Israeli diamond industry bestowed

its highest honor, the Lifetime Achievement Award, upon Nicky Oppenheimer, Chairman of De Beers, for his enormous contribution to the world diamond industry and to the Israeli industry in particular.

The event was held in the presence of past and current leaders of the Israeli industry, including Israel Diamond Institute (IDI) Chairman Moti Ganz, Israel Diamond Exchange President Yair Sahar, Israel Diamond Manufacturers Association President Bumi Traub, and Israel Diamond Controller Shmuel Mordechai. In addition to Nicky Oppenheimer, De Beers was represented by his son Jonathan, De Beers Chief Executive Officer Philippe Mellier, and DTC Chief Executive Officer Varda Shine.

An ‘Unbelievable Honor’Upon presenting the award to Nicky

Oppenheimer, IDI Managing Director Eli Avidar said, “This unique award is of the utmost significance to our industry. It represents our supreme appreciation of

one who has dedicated his or her life’s work to advancing the industry that we hold so dear.” He added that the award was in recognition of Oppenheimer’s vision, courage and inspiration, continuing a family heritage of honesty, integrity and adherence to the highest standards.”

Accepting the award, Nicky Oppenheimer, said: “I see this award as an honor not me but for the Oppenheimer family, past, present and future. From the time my grandfather moved to South Africa, the Oppenheimer family has had diamonds in its blood…You’ve done me, Jonathan and my ancestors an unbelievable honor.”

In Praise of Varda ShineOppenheimer recalled the contribution

of many past and present industry leaders, but the greatest praise he reserved for DTC Chief Executive Officer Varda Shine.

“In times of great crisis, what really makes the difference is having the right person on the top. We, as an industry, would not have managed to get past crisis in such a

splendid way if it wasn’t for the exceptional skills and leadership of our Varda Shine.”

As Oppenheimer was talking to Shine’s “home audience,” his remarks fell on very receptive ears; members of the audience read something else into them.

In his speech, Oppenheimer reminded the audience three times that his family sold out for US$5.1 billion-plus. While he quipped that “we haven’t received the money yet,” Oppenheimer intimated that the willingness of Anglo-American to invest in De Beers is the ultimate proof that the company has a great future in store for it. Essentially, Oppenheimer acknowledged that it was the exceptional leadership of Varda Shine that put De Beers into the position of having received its current value.

The Family’s Sale of the Diamond Business

Referring to his decision to sell his family’s 40 percent stake in De Beers to Anglo-American, Oppenheimer said, “It comes to the point that we can step aside. It is not easy at all...In my head I knew it was the right thing although my heart might feel differently… We know that we leave the Israeli industry and De Beers in good shape…Even if we are not invested in the diamond industry we will follow it with great expectations.”

About the Israeli diamond industry, Oppenheimer said: “I have had a long relationship with the diamond industry here. I knew when I came here that this was an industry and that these were a people I could relate to.” He added: “What will Israel’s role be in the diamond industry? I am filled with confidence because the people here are innovative, unbelievably entrepreneurial and move with the times. The diamond industry here has evolved and will continue to evolve. It will flourish on your skills and your expertise.”

Earlier in his visit, Oppenheimer met with Israeli Prime Minister Benjamin Netanyahu, accompanied by Moti Ganz, Phillipe Mellier and Varda Shine.

Israeli Diamond Industry Presents Lifetime Achievement Award to Nicky Oppenheimer

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(from left to right) Eli Avidar, Bumi Traub, Moti Ganz, Nicky Oppenheimer and Yair Sahar at the celebratory dinner.



NWT Government Selling Two Diamond Polishing PlantsThe government of Canada’s Northwest Territories (NWT) is looking internationally for buyers to take over two abandoned

diamond polishing factories. The buildings are on the market for C$900,000 each, according to CBC News. While the government is reportedly in talks with five companies, Pietro de Bastiani, Director of Diamonds for the NWT,

told the news source that says the government has not yet found the right buyer. The government’s search for buyers reportedly started last fall, when an extensive search for companies interested in

reviving the manufacturing plants came up short. Industry sources cite high operation and labor costs as some of the biggest challenges impeding the sales, which the government hopes will help it recover some of the money it has invested since the late 1990s in developing a local secondary diamond industry, according to CBC News.

Optimism RemainsDavid Ramsay, Minister of Industry, Tourism and Investment for the NWT, told the news source that the government is still optimistic

about developing a secondary industry in the territory and asserts that when the right operator comes along, more diamond polishing factories will also open in Yellowknife. He added that if the government offers higher quality diamonds to NWT-approved manufacturers, it would offset high operation costs.

Today, Crossworks Manufacturing Ltd. is the only polishing plant cutting diamonds in the NWT. It opened a plant in Yellowknife in 2008 in response to the commissioning of De Beers’ Snap Lake mine. Crossworks also has a plant in Sudbury, Ontario, which opened in 2009 and cuts diamonds from De Beers’ Victor mine.

Report: Mining to Drive Continued Economic Growth across Canada’s North

The Conference Board of Canada, the country’s independent, non-profit applied research organization, has issued a report titled Territorial Outlook: Winter 2012, which

forecasts that mining will contribute to strong economies in the Northwest Territories (NWT) and Nunavut over the next few years.

NWTThe report on the North’s economic and fiscal prospects says the NWT’s economy is rebounding from a slump that began

with the recession several years ago. Increased diamond production at Rio Tinto’s Diavik diamond mine and De Beers’ Snap Lake mine is helping the territory’s Gross Domestic Product (GDP) grow by six percent this year, reports CBC News.

The research also projects that the territory’s diamond industry should stay strong with production from Mountain Province Diamonds and De Beers’ joint venture, Gacho Kué, on the horizon. However, since the NWT has a more mature mining industry than its neighbors, the growth may not stay as strong in the years to come, reports the news source.

And despite low spending on mineral exploration, the report estimates that unemployment in the NWT will hit a five-year low in 2013. Therefore, hiring locals will keep more money in the North, concludes the news source.

Nunavut For the Nunavut province, the Conference Board of Canada forecasts strong economic growth over the next two years,

according to CBC News, which adds that Nunvaut’s economy is expected to grow seven percent this year, well above the Canadian rate of two percent.

The report cites several new mines expected to go into production, including Peregrine Diamonds’ Chidliak diamond project on Baffin Island, which will translate into demand for local skilled workers.

The latest numbers from Statistics Canada show Nunavut has almost 18 percent unemployment. Therefore, planning and training are needed now to ensure out-of-work locals get the jobs, reports CBC News, citing the report.

For access to the report, click here: http://tinyurl.com/6szgrtm

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Crossworks Manufacturing (photo by Bill Bradley)

http://tinyurl.com/6szgrtm


DIGGING THE DIRT

Report: Lukoil to Spend$1 Billion to Open

Diamond Mine Next YearRussian oil producer OAO Lukoil plans

to start a diamond mining project next year after investing about US$1 billion, reports Bloomberg citing two unnamed sources.

The Moscow-based oil company may mine as many as 4 million carats of rough diamonds a year at the Grib pipe in Russia’s northern Arkhangelsk region, once co-owned by De Beers, the sources told the news source.

After the start of production, Lukoil, which will reportedly invest US$1 billion in the project before the first stone is produced, plans to sell the project to a strategic investor such as state-controlled diamond miner Alrosa, according to the report. Alrosa produced 26.3 million carats in the first nine months of 2011 and has a 2011 full-year production projection of 34.5 million carats.

Gleb Ovsyannikov, a Lukoil spokesman, declined to comment to Bloomberg, and Andrey Polyakov, Alrosa’s spokesman, said no talks have been held with Lukoil about the mine.

As DIB prev ious ly repor ted, Arkhangelskgeoldobycha (AGD), which is wholly owned by Lukoil and currently bringing the Grib diamond pipe into production, signed a marketing contract last month with London-based WWW International Diamond Consultants Limited (WWW), whereby the company will advise the miner on how best to maximize its rough diamond output once it comes on stream at the end of 2013.

Possible Bidders Named for Ekati Purchase from BHP Billiton

Harry Winston Diamond Corp. and groups led by private equity firm KKR & Co. and investment management firm Apollo Global Management LLC are reportedly in talks to buy BHP Billiton’s Ekati diamond mine in Canada’s Northwest Territories, reports Bloomberg, citing unnamed sources. Apollo has teamed up with former Stornoway Diamond Corp. Chairman Eira Thomas to pursue Ekati, sources say.

The sale may fetch anywhere between US$500 million and US$750 million and an agreement could be reached in about a month, according to the news report.

On November 30, 2011, BHP Billiton announced that it was reviewing its diamonds business and its future in it. While the world’s largest mining company still holds an 80 percent interest in Ekati, in early February, it completed the sale of its 51 percent interest in the Chidliak diamond exploration project in Canada’s Nunavut province to project operator Peregrine Diamonds Ltd. The Ekati mine is valued at US$300 million to US$500 million, Tim Gerrard, a Sydney-based analyst at Investec Securities Ltd., said in January, as reported by the news source.

Possible BuyersBob Gannicott, Chief Executive Officer of Harry Winston, which owns a 40 percent

stake in the Diavik diamond mine, located near Ekati, said during a December conference call that the Ekati mine was “of some interest,” adding that the asset “is close to the end of its existing life,” reports Bloomberg.

Stornoway’s Thomas, a geologist who is also a director of Vancouver-based Lucara Diamond Corp., led the exploration team at her father Grenville Thomas’s company, Aber Diamond Corp., that discovered Diavik in 1994.

KKR and Apollo, both based in New York, have made investments in natural resources in recent months. According to Bloomberg, it is not yet clear who KKR had teamed up with to bid for the Ekati mine.

Spokesmen for BHP, KKR, Apollo and CIBC World Markets had declined to comment to the news source, as did Laura Kiernan, director of investor relations for Harry Winston. Additionally, Thomas couldn’t immediately be reached for comment.

BHP BillitonBHP’s diamond and specialty products division had an asset value of US$2.8 billion

as of June 30, compared with $18.6 billion for its petroleum business, according to data compiled by Bloomberg. The unit’s first-half underlying earnings dropped 61 percent.

The miner said in January that a review of its diamond business could extend through to the first half of 2012. Chief Executive Officer Marius Kloppers said last month there was no update on the sale and, in the absence of a buyer, BHP would “probably run that mine to closure ourselves in a manner responsible to the environment and community.”

The Ekati Mine Site

OAO Lukoil Headquarters in Moscow(Photo: Andrey Rudakov and Bloomberg)


DIGGING THE DIRT

Botswana Diamonds Commences Sampling Operations in CameroonDiamond exploration and development company Botswana Diamonds plc reports that sampling operations have commenced

on its 85 percent-owned Mobilong diamond license in eastern Cameroon. Two 100-150 tonne samples are being gathered from areas of potentially diamond-bearing conglomerate identified in earlier exploration, reports the AIM-listed company. Results are expected in the second quarter of this year.

In Zimbabwe, a small bulk sample is ongoing on diamond claims in the Masvingo area, where Rio Tinto discovered diamond indicator minerals and kimberlites, notes the firm. The purpose of the work on the claims, which are 49 percent owned by Botswana Diamonds and 51 percent owned by local Zimbabwe firms, is to confirm the presence of kimberlites and to determine if they are diamondiferous.

Additionally, in Botswana, data-gathering preparation and analysis continues on the company’s 50:50 joint venture with initial results expected in the last half of 2012.

Management ChangesIn other company news, the board of Botswana Diamonds has announced that Andre Fourie is stepping down as a director,

although he will continue to consult to the company. An additional director will be appointed in the near future.The board has also appointed Kabelo Mohohlo to the board of Kukama Mining and Exploration and Atlas Minerals, the

company’s wholly owned Botswana subsidiaries. Mohohlo will oversee the growing presence of Botswana Diamonds in Botswana. Mohohlo is currently managing director of African Alliance Botswana Securities and a director of the Botswana Stock Exchange and the Central Securities Depository Company.

South African diamond miner Rockwell Diamonds Inc. reports that it has reached a restructuring agreement with its black economic empowerment (BEE) partner, Africa Vanguard

Resources (AVR). The agreement includes a payment

to AVR by Rockwell of US$1.9 million (ZAR15 million), in the form of Rockwell shares listed on the Johannesburg Stock Exchange. Also incorporated into the settlement arrangement is the purchase consideration by Rockwell for AVR’s Jasper mine property, which is contiguous to Rockwell’s Saxendrift mine and has the potential to extend the life of Saxendrift, which is currently three years. Preliminary estimates

indicate that the past-producing Jasper mine has remaining diamond-bearing deposits that are easily accessible to the infrastructure at the Saxendrift mine, notes Rockwell.

The completion of these transaction is subject to the completion by Rockwell of a due diligence investigation, regulatory approvals and obtaining approval from South Africa's Department of Mineral Resources with respect to certain parts of the transaction.

According to Rockwell, the new settlement with AVR will provide the miner with the opportunity to enter into a new BEE partnership and will also retain AVR as a meaningful shareholder in Rockwell.

“Having resolved one of the last remaining legacy issues

impacting the Company, the management team will be able to spend more time on its diamond value management strategy which is a key driver to delivering on its short and medium plans to create value for all its stakeholders,” says Mark Bristow, Chairman of Rockwell.

“This is another step in our journey to create an intermediate value driven diamond business. Our ongoing engagement with several potential BEE partners who share our vision and strategic objectives give us confidence that we will be able to forge a partnership that will add value to our business going forward,” adds James Campbell, Rockwell Chief Executive Officer.

As required by South African law, Rockwell entered into an arrangement with AVR to permit them to purchase a 26 percent interest in the company under the BEE legislative provisions.

Rockwell Restructures BEE Deal with AVR

Saxendrift Mine

Rockwell CEO James

Campbell


DIGGING THE DIRT

Fi restone Diamonds plc has announced a financing through Mirabaud Securities LLP to raise £14.7 million (US$23.3 million) before expenses as part of the restructuring of the company. The proceeds will also be used in the ongoing development of the company’s Liqhobong mine in Lesotho, as well as for repayment of debt, ongoing costs of the BK11mine in Botswana and for general working capital purposes.

Citing reasons for the placement, the AIM-listed diamond mining and exploration company reports that it conducted a strategic review of its operations during January and February 2012 in order to address concerns relating to its “disappointing” operational performance and financial results; consequently, the review identified the future development of Liqhobong with the emphasis on the Main Treatment Plant as the company’s primary value driver.

A definitive feasibility study (DFS) of the Main Treatment Plant will be completed by mid-2012 to be followed by detailed front end engineering and financing during the latter half of calendar year 2012. According to Firestone, this renewed focus on the Liquobong plant is expected to transform the company from an early-stage development and exploration business to an annual producer of an estimated 1 million carats by 2015.

Placing & Capital Reorganization

Firestone says it has provisionally placed 172,900,000 new ordinary shares of 1 pence each in the company (i.e., Placing Shares) with institutional and other investors at a price of 8.5 pence per Placing Share raising £14,696,500 before expenses.

As the company’s shares are trading at a price below their par value, Firestone reports that its directors are unable to allot the Placing Shares under the Companies Act 2006. Consequently, the directors have proposed a reduction in the par value of the company’s issued ordinary

shares from 20 pence per share to 1 pence per share by way of a sub-division and re-classification of its existing issued share capital.

The completion of both the placing and capital reorganization is conditional on shareholder approval.

“We are very pleased with the support from new and existing institutional shareholders in the Placing which was oversubscribed and demonstrates the strong support for the Company’s flagship Liqhobong project in Lesotho,” says Tim Wilkes, Firestone Diamonds Chief Executive Officer.

To see Fi restone’s L iqhobong development schedule, and for more details of the placing, click here: http://tinyurl.com/7qoe5ty

Unaudited ResultsIn other company news, Firestone

has released its unaudited interim results

for the six months ended December 31, 2011, which reveal that the miner’s revenue for the first half of fiscal 2012 totaled £1.97 million (US$3.13 million), up from £1.05 million (US$1.67 million) for the same period a year ago. Firestone reported an operating loss of £8.6 million (US$13.6 million) for the six-month period, compared to an operating loss of £1.6 million (US$2.5 million) in the comparable period a year ago. Loss after tax for the period was £8.7 million (US$13.8 million), compared to £1.8 million (US$2.9 million) a year ago.

Liqhobong, Lesotho

According to Firestone, 42,802 carats from Liqhobong were sold at an average price of US$59 per carat during the first six months of fiscal 2012, realizing US$2.5 million. This compares to 17,082 carats sold in the second half of fiscal 2011 at an average price of US$140 per carat. “This price is well off the $123/carat realised at our June 2011 tender and was negatively affected by the general decrease in diamond prices that affected the smaller near gem quality part of the assortment as well as the average smaller size stones included in the tender,” notes the miner.

A total of 207,845 tons were treated in the six-month period at the company’s Pilot Plant at Liqhobong, compared to 72,991 tons treated during the second half of fiscal 2011. Firestone reports that

Firestone Announces Financing, Results, Management Changes

Aerial View of Liqhobong Mine

Tim Wilkes

http://tinyurl.com/7qoe5ty


DIGGING THE DIRT

70,192 carats were produced during the first half of fiscal 2012, compared to 23,296 carats produced in the second half of fiscal 2011. Diamond grade was 33.77 carats per hundred tons.

During the period under review, the mine was increased from processing 65 tons per hour to 85 tons per hour, and will be increased to over 100 tons per hour during the second half of the 2012 financial year due to further planned improvements to the Pilot Plant, which will also reduce large diamond stone breakages.

As already mentioned, the Main Treatment Plant’s definitive feasibility study (DFS) commenced during the period under review and is scheduled to be completed in June 2012.

BK11, Botswana

Firestone reports that it sold 8,168 carats from its BK11 mine in Botswana during the first six months of fiscal 2012 at an average price of US$133 per carat. This compares with 4,277 carats having been sold at an average price of US$233 carats during the second half of fiscal 2011. The mine produced 9,910 carats at 2.5 carats per hundred tons during the six-month period.

As announced at the end of February, Firestone decided to put BK11 on temporary care and maintenance to conserve cash and allow diamond prices to recover prior to making the considerable investments needed at the mine. “This is as a precautionary measure due to the technical challenges encountered combined with a weaker

diamond market for the smaller stones,” notes the miner.

Elsewhere in Botswana, Firestone says that kimberlite prospecting licenses in the Kokong area of Botswana have been added to the miner’s Tsabong and Orapa satellite licenses.

Financials

Firestone’s financing activities during the six-month period included raising £12.8 million (US$20.3 million) net of expenses in a private placement in July and August at 27.75 pence. The company’s cash balance as of December 31 was £4.2 million (US$6.7 million).

Outflow of funds totaled £12.8 million during the period under review and included expenditure of £1.3 million (US$2.1 million) on debt and interest repayments, £5.6 million (US$8.9 million) on property, plant and equipment, and £5.9 million (US$9.4 million) from operations, notes the miner. The outflow from operations was affected by reduced diamond sales prices resulting in £2.2 million (US$3.5 million) less revenue than expected. According to Firestone, increased working capital absorbed £0.6 million (US$0.952 million)

and there were £3.1million (US$4.9 million) of increased operational expenses due to ramp-up delays.

Firestone also gained a secondary listing on the Botswana Stock Exchange in July 2011.

Board Changes

Firestone also reports that in regard to changes to its Board of Directors, Abraham (Braam) Jonker was appointed as a non-executive director on December 14, 2011, and James Kenny resigned as non-executive director on December 30, 2011. Additionally, Philip Kenny resigned as executive chairman on January 16, 2012, and Lucio Genovese was appointed in his stead on January 17, 2012, as non-executive chairman.

Michael Hampton and William Douglas Baxter have also resigned from the Board of Directors with immediate effect.

Outlook on ResultsConcludes Tim Wilkes: “The higher than

expected cash outflows in H1 2012 are mainly due to the general weakness in the diamond price experienced from July 2011 combined with technical challenges experienced at both the Liqhobong and BK11 plants. With the restructuring that has been undertaken, the Company is now focused on increasing Liqhobong’s revenue per carat production in 2012 and in developing the Main Treatment Plant in order to reach our target of producing over 1 million carats per annum by 2015, whilst achieving the required run rate by Q4 2014”.

BK11 Main Bulk Sampling Plant

Liqhobong Plant


KP UPDATE

KPCS Launches Redesigned WebsiteThe Kimberley Process Certification Scheme (KP) has officially

launched a redesigned website that aims to be more modern, efficient, interactive and transparent, according to the U.S. Chair, Ambassador Gillian Milovanovic, and her team.

The website, http://www.kimberleyprocess.com/, features the following updates:

The Public side of the website provides updated information on KP Participants, Observers, candidate countries and Working Groups, as well as streamlined data for the public and a new

blog section, where Participants and Observers will be able to contribute stories about their work. There is a new section dedicated to Diamonds and Development, which is currently under construction, and there will also be a section on Enforcement. A link to the KP’s new Facebook page has been added as well.

On the Participants-only side (for which new log-on information is forthcoming), new features will be added to make the work of the KP and its Working Groups “more efficient, transparent to all in the KP, and less reliant on e-mail,” notes a KP statement issued by J.J. Harder,

the advisor to the KP Chair. According to Harder, the official KP Intersessional registration is expected to appear online for use already by next month. In addition, in the coming weeks, the KP will reportedly transition from e-mailing documents to posting them online and then emailing alerts that the website has been updated.

KP Chair to Host WebChatU.S. Ambassador Gillian A. Milovanovic, the Chair of the

Kimberley Process Certification Scheme (KP), will host an on-the-record WebChat about the KP on Tuesday, April 3, 2012, EST (United States). The goal of the WebChat is to discuss the KP, how it works, what it has achieved, and how it plans to move forward.

To join the event, go to http://conx.state.gov/digital-diplomacy/. Questions can be submitted both during the chat and prior to it.

In related news, in her role as KP Chair, Ambassador Milovanovic is slated to address the 8th Annual Meeting of the World Diamond Council (WDC) in Vicenza, Italy, which is scheduled for May 13 and 14. She will join senior government officials from a number of countries who will be attending the event.

JVC: Kimberley Process Annual Reports Due on April 1st

The U.S. State Department requires that rough diamond importers and exporters file an annual report with the Office of the Special Advisor for Conflict Diamonds at the U.S. Department of State each calendar year on April 1st. The report must state the total carats of rough diamond imports and exports and any stockpiles remaining at the end of the year, according to the Jewelers Vigilance Committee (JVC). Once completed, the report should be submitted by email to [email protected].

The JVC offers a form to assist diamond dealers with this obligation, available to members on the JVC Forms Bank at www.jvclegal.org. The JVC says its form is provided as a template, but there is no requirement that the information be reported in any particular format – so long as it is reported.

For more detailed information see The Essential Guide to Implementing the Kimberley Process, a publication of the World Diamond Council, available at www.jvclegal.org.

EU Renews Restrictive Measures against Marange Diamonds

until Feb. 2013The European Union has renewed its restrictive measures

against rough diamonds from Zimbabwe’s Marange area until February 2013. In an annex to previous notices (dated 15/12/2011 and 15/02/2012) sent last week, Frieda Coosemans, the EU's Directorate-General Economic Potential – Licence Service (diamonds), says the following:

“In addition to the previous notices on rough diamonds from Zimbabwe/Marange, we would like to inform you that the EU restrictive measures against Zimbabwe have been renewed and shall apply until 20/2/2013 (Council Decision 2012/97/CFSP of 17 February 2012 amending Decision 2011/101/CFSP concerning restrictive measures against Zimbabwe).”

According to the annex, the list of persons and entities to which the restrictive measures apply has been updated.

“However, the Zimbabwe Mining and Development Corporation (ZMDC) figures st i l l on the sanct ions l i s t and t h e r e f o r e t h e guidelines set out in our notices of 15/12/2011 and annex of 15/02/201 remain val id.”

Gillian Milovanovic

http://www.kimberleyprocess.com/

http://conx.state.gov/digital-diplomacy/

mailto:[email protected]

http://www.jvclegal.org

http://www.jvclegal.org


OFF THE SHELF

Jewelry retailer Tiffany & Co. has recorded a year-over-year 18 percent rise in worldwide net sales to US$3.6 billion and a 19 percent rise in net earnings to US$439 million for the year ended January 31, 2012. Net earnings as a percentage of net sales rose to 12.1 percent, from 11.9 percent in the prior year.

During the fourth quarter of fiscal 2011, ended January 31, 2012, worldwide net sales increased 8 percent, year over year, to US$1.2 billion. Net earnings for Tiffany’s declined 2 percent to US$178 million from US$181 million in the comparable quarter of the prior year.

“Tiffany exceeded the goals that we had set at the start of 2011 for both sales and earnings growth, although we concluded the year with softer-than-expected results. Nonetheless, we remain focused on successfully executing our long-term strategies and pursuing Tiffany’s substantial global growth potential in 2012 and beyond,” says Michael J. Kowalski, chairman and chief executive officer.

Regional SalesIn the Americas region, sales increased

15 percent to US$1.8 billion in fiscal 2011 and rose 5 percent to US$605 million in

the fourth quarter. Combined Internet and catalog sales in the Americas rose 6 percent in fiscal 2011 and declined 4 percent in the fourth quarter.

In the Asia-Pacific region, sales rose 36 percent to US$748 million in the full year and increased 19 percent to US$225 million in the fourth quarter. In Japan, sales increased 13 percent to US$617 million in fiscal 2011 and rose 12 percent to US$204 million in the fourth quarter.

In Europe, sales increased 17 percent to US$421 million in the fiscal year and 3 percent to US$142 million in the fourth

quarter. Throughout the fourth quarter and year, sales growth in Continental Europe was relatively stronger than results in the U.K.

Other sales declined 5 percent to US$51 million in the fiscal year and 22 percent to US$12 million in the fourth quarter due to declines in wholesale sales of rough diamonds in both periods as well as lower wholesale sales of finished products to independent distributors in the fourth quarter.

Management OutlookAccording to Kowalski, the jeweler’s

expansion plans for 2012 include opening a net of 24 stores, including nine in the Americas, seven in Asia-Pacific, three in Europe, and commencing operation of five stores in the United Arab Emirates. As of January 31, 2012, the company operated 247 stores (102 in the Americas, 58 in Asia-Pacific, 55 in Japan and 32 in Europe), versus 233 (96 in the Americas, 52 in Asia-Pacific, 56 in Japan and 29 in Europe) a year ago.

The company’s financial guidance for 2012 calls for worldwide sales growth of approximately 10 percent, primarily driven by sales growth in Asia-Pacific and the Americas.

Blue Nile Appoints New CEO, PresidentOnline diamond jewelry retailer Blue Nile, Inc. has appointed Harvey Kanter as the

company’s Chief Executive Officer and President, effective March 30, 2012. Kanter will also be appointed to Blue Nile’s Board of Directors, effective March 30, 2012.

Mark Vadon, Chairman of the Board of Directors of Blue Nile, will assist in Kanter’s transition. Interim Chief Executive Officer Vijay Talwar has been appointed Blue Nile’s General Manager and President of International, and will lead Blue Nile’s international business.

Kanter brings more than 25 years of merchandising and retail experience to lead Blue Nile’s recently announced growth strategy. Prior to joining Blue Nile, Kanter served as President and Chief Executive Officer of Moosejaw Mountaineering and Backcountry Travel, Inc., a leading multichannel retailer of premium outdoor apparel and gear.

Additionally, from April 2003 to June 2008, Kanter served in various executive positions at Michaels Stores, Inc., a specialty retailer of arts and crafts, most recently serving as the Executive Vice President and Managing Director from March 2006 to June 2008.

While at Michaels, Kanter also served as the President of Aaron Brothers, Inc., a division of Michaels, from April 2003 to March 2006. From October 1995 to March 2003, Kanter served in various management positions at Eddie Bauer, Inc., a premium outdoor retailer, including serving as the Vice President and Managing Director of Eddie Bauer Home, a division of Eddie Bauer. Prior to Eddie Bauer, Kanter held positions at several other retailers, including Sears Roebuck Company, a multi-line retailer, and Broadway Stores, Inc. (known as Carter Hawley Hale Department Stores), a department store.

Tiffany & Co. Posts 18% Increase in Worldwide Net Sales

Harvey Kanter

Tiffany's Michael

Kowalski


OFF THE SHELF

Zale Names New GM of Piercing Pagoda

North American specialty diamond retailer Zale Corporation has appointed Jamie Singleton as Senior Vice President and General Manager of its Piercing Pagoda kiosk jewelry retail brand, effective March 27. In her new role, Singleton will have overall responsibility for the company’s kiosk business and will report to Theo Killion, Zale Chief Executive Officer.

“We are delighted to welcome Jamie to our team. She is an experienced retail executive with a diverse set of skills that includes merchandising and business development,” says Killion. “Jamie has a strong track record of maximizing opportunities for profitable growth. She will be instrumental in helping us grow the Pagoda brand.”

Singleton most recently served as Senior Vice President, Business Expansion at CPI Corp. where she led the integration of Bella Pictures,

Inc., an internet-based wedding photography company. Prior to that, she served in a senior management

capacity at Custom Brands International, Inc. and as Senior Vice President, General Merchandising Manager at May Bridal Group.

Currently, there are more than 655 Piercing Pagoda kiosks in the United States and Puerto Rico, as well as an online store.

Christie’s Geneva to Auction ‘Jewels for Hope’ to Benefit Charities

Christie’s Geneva is selling the jewelry collection of philanthropist Mrs. Lily Safra, scheduled for May 14, 2012, from which all proceeds will be donated to 20 different charitable institutions. Featuring 70 lots, the collection of Mrs. Safra is estimated to realize in excess of US$20 million and includes diamonds, rubies and sapphires, as well as an array of fine antique and period jewelry collected from the 1970s to the present day.

A special section of the sale will be dedicated to a group of extraordinary jewels by JAR, the majority of which were created specifically for Mrs. Safra by the French jeweler between the 1980s and 2000s. Showcasing 18 pieces, this is the largest private collection of creations by JAR ever to be offered at auction.

“A sublime collection of 70 rare jewels, comprising the very best in all styles, periods and makers, from the late 18th Century all the way to modern times, is enough to attract the attention of jewellery amateurs and professionals worldwide. When it includes also the largest group of creations by JAR ever to be offered at auction, it is bound to create a sensation. And when the entire proceeds of the sale are to be shared between 20 hand-picked charitable institutions in the four corners of the world, this landmark sale rises to a whole new level,” says François Curiel, International Head of the Jewellery Department.

Auction viewings will be held on May 11-14 in Geneva. Preceding the viewings, an international tour of the collection is as follows: London, March 29-30; New York, April 14-17; Paris, April 19-20; and Hong Kong, April 27-28.

To learn more about Mrs. Lily Safra and for a full list of the 20 charities that will benefit from the sale, click here: http://tinyurl.com/7jp48jw

U.S. February Retail Sales Increase 8.6%U.S. February retail industry sales (excluding automobiles, gas stations and restaurants) increased 0.5 percent seasonally adjusted

from January, and 8.6 percent unadjusted year-over-year, marking 20 consecutive months of sustained year-over-year retail sales growth, reports the U.S.-based National Retail Federation (NRF).

According to the NRF, February retail sales released by the U.S. Department of Commerce show total retail sales in the country (which include non-general merchandise categories such as autos, gasoline stations and restaurants) increased 1.1 percent adjusted month-to-month and 10.3 percent unadjusted year-over-year. NRF says it continues to forecast that retail industry sales will rise 3.4 percent in 2012 to US$2.53 trillion.

“Pent-up demand is turning desires into needs, which is one reason why consumers have begun opening up their wallets,” says NRF Chief Economist Jack Kleinhenz. “There is no doubt that the economy is on the upswing, certainly compared to six months ago. Stronger-than-expected February sales and an improving labor market paint a bright picture of the U.S. economy, although the impact rising gas prices will have on the economy’s momentum remains unclear.”

Among the findings from February retail sales numbers, clothing and clothing accessories stores saw retail sales increase by 1.8 percent seasonally-adjusted month-to-month and 11.6 percent unadjusted year-over-year.

A set of twelve antique diamond leaf brooches and a pair of ear clips, mid-19th

Century, Estimate: $200,000-$400,000

http://tinyurl.com/7jp48jw


BRIEFLY NOTED

Rio Tinto Publishes Details of Its Global Tax Payments in 2011

Integrated miner Rio Tinto has published its latest “Taxes Paid Report,” which details the US$10.2 billion of taxes the company paid globally in 2011, representing a 38 percent increase over 2010. The voluntary report, the second of its kind, also breaks down the details of all individual payments over US$1 million made to governments in the 34 countries where the group operates.

According to Guy Elliot, Rio Tinto Chief Financial Officer, the company’s total tax charge for the year, including final payments due after 2011, was US$10.7 billion, which represents 40 percent of the firm’s underlying profit before tax.

“We have chosen to disclose these details voluntarily because we believe this level of transparency helps us to retain our licence to operate, promotes government accountability and plays a role in combating corruption,” says Elliott. “This report demonstrates that effective disclosures can be made by businesses on a voluntary basis, in a similar fashion to what has been achieved in the area of sustainable development reporting, and that there is no need for additional legislation.”

In Australia, where Rio Tinto operates its wholly owned Argyle diamond mine, among other mines, the company paid US$4.9 billion in corporate taxes and US$2 billion in government royalties. In Canada, where it owns a 60 percent share of the Diavik diamond mine in the Northwest Territories, among other operations, Rio Tinto paid US$407 million in corporate taxes and US$72 million in government royalties. In Zimbabwe, where the miner owns a 78 percent share of Murowa diamond mine, Rio Tinto paid US$9 million in government royalties. To download the report, click here: http://tinyurl.com/7vxuc5t

Gem-A Confirms Relationship with Japan Gem SocietyThe Gemmological Association of Great Britain’s (Gem-A) gem education will now be provided in Japan through the Japan

Gem Society (JGS). Newly launched JGS, formerly the Institute of Gem Culture, a long-established Gem-A Teaching center acting via VO-GAAJ, now operates under the auspices of the Japan Jewelry Craft School.

The agreement for JGS to provide Gem-A Courses was finalized at meetings in Hong Kong in February 2012 between JGS Chairman Akira Ito, Nilaam Alawadeen, Gem-A Chairman James Riley, and Gem-A Chief Executive Officer Dr. Jack Ogden.

“Japan is a major player on the world jewellery stage and an important market for Gem-A. I am delighted that we have been able to cement this relationship between Gem-A and JGS and we look forward to helping to grow access to excellent gem-education in Japan,” says Gem-A CEO Dr Jack Ogden.

Adds JGS Chairman Akira Ito: “JGS has been operating as a Gem-A teaching centre since the 1980s. With this new collaboration between JGS and the Japan Jewelry Craft School, and the agreement of Gem-A, we now can introduce a wider audience to Gem-A’s internationally respected courses.”

Gem-A has numerous teaching centers across Asia, including China, Hong Kong, Japan, Korea, Singapore and Taiwan.

DIAMOND INTELLIGENCE BRIEFS, available only by subscription, is published on a weekly basis to ensure a speedy dissemination of information indispensible to executives in the

diamond and diamond jewelry business. While the information herein is carefully compiled from sources believed reliable, no responsibility for its accuracy can be assumed and no representation of warranty expressed or implied is made as to their completeness or correctness.Diamond Intelligence Briefs may not be reproduced, distributed, published or used otherwise for any purpose but for the personal information of the subscriber without the prior written consent of the publisher.

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