Diamonds were — a very, very long time ago — an investor’s best friend. In this month’s cover story, David McKay eloquently outlines the challenges faced by the diamond sector and its iconic miner and marketer, De Beers.
While the JSE was built largely on the gold discoveries on the Witwatersrand (and later, other rich extensions), the earliest stock exchanges in Kimberley and Cape Town were formed to capitalise on the diamond rush of the 1870s.
But since the delisting of De Beers in 2001, after the diamond giant was incorporated into parent company Anglo American, the JSE has not exactly glistened with diamond listings.
Trans Hex Group offered, for a while, a smaller alternative, with a handful of smaller, mostly explorative, ventures, hanging about briefly.
There was a time, in the late 1990s, when the lure of high-quality marine diamonds enthralled local investors, with much speculative attention directed at Ocean Diamond Mining Holdings (ODM) and Benguela Concessions (Benco).
Aside from the intriguing Gemfields — which specialises in rubies and emeralds — there are no proper diamond plays left on the JSE
ODM, headed by the highly capable André Louw, started building a compelling and regular production record. In fact, Trans Hex, whose alluvial concessions were starting to get near the end of their life, made a well-timed move on ODM. This would have been a game-changer for Trans Hex, but rival marine diamond miner Namco managed to snaffle ODM away from Trans Hex. Trans Hex ended up buying into Benco, while Namco went careering onto the rocks.
Over the past 20 years there has been a smattering of small diamond ventures (Rockwell, DiamondCorp and Delrand spring to mind) — and also some outright dogs like the short-lived Regional Resources, Zenith Concessions, Kimberley Consolidated Mining and Good Hope Diamonds.
Aside from the intriguing Gemfields — which specialises in rubies and emeralds — there are no proper diamond plays left on the JSE.
There are a couple of part plays, aside from Anglo American. The controversial Namibian investment company Trustco has diamond mining interests in Sierra Leone and northern Namibia. Small investment company Astoria still has a meaningful stake in a much-improved and dividend-paying Trans Hex — which is again, with renewed vigour, looking to scour the ocean floor for diamonds. Neither can, at this stage, be regarded as proxies for diamond mining.
It would be interesting, at this delicate juncture for the diamond mining industry, to see the market response if Anglo American did decide to relist De Beers. De Beers, of course, might prefer to remain out of the public eye.
Then again, I wonder if the JSE, which has enjoyed success with inward secondary listings, should be coaxing meaningful companies such as Gem Diamonds and Petra Diamonds to the local bourse. The cycle will turn and investors will covet the sparklers again.
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