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The global diamond glut worsens

[LONDON] De Beers recent diamond sales fell to the lowest since 2017 in the latest sign of difficulties plaguing the global industry.

The Anglo American Plc unit sold just US$415 million of gems in its fourth sale of the year, down 25 per cent from a year earlier. While it's often a quieter time of the year -- as the industry has restocked after key holiday sales -- the total so far in 2019 is still much weaker than in previous years.

Diamond miners are struggling across the board, especially those producing cheaper and smaller gems where there is too much supply. In December, some of Rio Tinto Group's customers refused to buy cheaper stones, while De Beers was forced to cut prices toward the end of last year and offer concessions to buyers.

Still, De Beers has held prices relatively stable so far this year. That has led to customers declining to take up all the stones they'd previously agreed to buy as they struggle to make a profit at current prices. A shortage of finance, a weak Indian rupee and stagnant end demand has made it difficult for De Beers's customers to make a return.

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"Cycle four saw lower rough-diamond sales against a backdrop of macroeconomic uncertainty, and as we enter a seasonally slower period for the industry with Indian factories closing temporarily for the traditional holiday period," De Beers Chief Executive Officer Bruce Cleaver said in a statement.

De Beers sells gems at 10 sales a year in Botswana to a select group of customers. The buyers are expected to specify the number and type of diamonds they want, and then carry out the purchases at a price set by De Beers.

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