Russian Rich Kids, and Diamonds Too

Investors welcomed news this morning that AIM listed mining group Petra Diamonds (LON:PDL) was set to buy the Finsch diamond mine in South Africa from De Beers for R1.425 billion (£126.6m). The Petra Diamonds share price surged by 11% to 180p during the morning. Finsch is one of the world's major diamond mines and South Africa's second largest diamond mine by production.

Diamond mining group De Beers reported a return to profit Friday, saying a boom year in diamonds in 2010 had made it "highly cash generative and profitable."The world's largest diamond company reported sales of $5.9 billion dollars (4.3 billion euros) in 2010, up from 3.8 billion dollars the year before, and a profit of 638 million dollars, up from a loss of 32 million dollars in 2009."2010 was an extraordinary year that saw De Beers rapidly move from stabilisation to strong recovery," the company's directors said in a statement.

Diamonds may be forever, but profits are subject to the whims of the market. Lucky for De Beers, tied with Russia?s Alrosa for the title of the world?s largest diamond producer, the demand for rough diamonds in 2011 was enough to send profits soaring 53.2 percent.??Total sales rose to $7.4 billion from $5.9 billion, thanks ...

Terry Staggs of Kentucky was visiting the Crater of Diamonds State Park in Arkansas on July 4th when he saw something in the dirt sparkle in the sunlight.

While the global 'central-bank-inspired' wealth effect has benefited the uber-rich more than anyone else, it seems China's burgeoning middle class is more than happy to 'settle' for mediocrity in their fascination with luxury goods. As Bloomberg notes, the demand for diamonds is so heavy (and less discriminatory) that the price of lower-quality gems has surged as the price of high-quality 'flawless' diamonds has been very subdued.

De Beers, the world's largest producer of rough diamonds, is paring back its output for this year in response to slightly weaker demand.