DIAMOND MARKET OVERVIEW
Traders are reporting resistance to pay higher prices in certain areas of polished. However, the tone in the polished market is positive. The upward trend seems to be holding, with overall prices gradually firming. This month’s Hong Kong trade show (March 5) and the Basel Watch and Jewellery Fair later this month will be important indicators for buying interest by retailers as well as design preferences in colours and qualities. Activity in the Far East is set to increase again as traders are returning from the Chinese New Year holiday. Retail sales during the Lunar Year holiday, were reportedly up 17.2%, compared to the same period. There are reports of shortages in smaller fine qualities and some are expecting to see further increases in these ranges. Meanwhile, the overall PolishedPrices index opened slightly lower on Friday at 116.79 points, compared to Monday’s opening at 117.47. This compares to 112.4 points at this time last year.

ROUGH MARKET
Overall the rough market seems to be pausing for some breath, with traders reporting less frenzy buying activity in the secondary market, compared to the previous weeks.  But rough remains strong and expectations that prices will continue to rise remain. Petra Diamonds sold a 507 carat rough diamond for $35.3 million, the highest price ever paid for a rough diamond, according to the AIM-listed mining company. DTC cited in the press saying there had been “some incremental adjustments in DTC boxes over the past few Sights and a further single-digit increase for Sight 2” (February Sight). Alrosa announced it may increase supplies to the market to stem speculative trading and bring rough prices more in line with supply. Traders will be looking at how the secondary market will absorb such an increase in volumes. The expectations for now remain a firmly upward trend.

CORPORATE AND EVENTS
Alrosa announced it may increase supplies to the market, during a meeting with India’s Gem & Jewellery Export Promotion Council (GJEPC) this week. It also said it plans to increase the number of long term customers. A four member delegation from Alrosa, headed by Vice President Yury Okoyomov, and GJEPC met in Mumbai on February 22nd. In a joint statement Alrosa and GJEPC said around 47 Indian firms purchased rough diamonds from Alrosa, totalling $550 million during 2009 – more than half the group’s total exports. It said, currently, seven Indian firms have long term contracts with Alrosa. “ALROSA shares the GJEPC's concern over speculative trading in rough and plans to increase the number of long-term clients in the future in order to ensure a stable flow of rough to the market. There is, however, no fixed time-frame for this as yet,” the statement said. “Since global markets are showing healthy signs of recovery, Alrosa might increase its supplies to the market reducing sales to the State Fund. This way, rough diamond pricing would be more in tune with supply and not the product of speculation," it said. “While Alrosa will use some tendered sales to aid in price discovery, it firmly favours long term contracts for the bulk of its rough supplies in order to maintain stability in the market. "While Alrosa is watching the world markets very carefully and is closely monitoring parameters that might indicate a second recessionary dip, it has no plans at present to cut mining production,” the statement said.

Petra Diamonds sold the 507 carat 'Cullinan Heritage' for $35.3 million, the highest sale price on record ever achieved for a rough diamond, according to the AIM-listed diamond mining company. The diamond was sold on tender in South Africa and was purchased by Chow Tai Fook Jewellery Company Limited, Hong Kong. The purchaser has not at this stage advised Petra of their plans for the diamond, it said. "The price achieved for The Cullinan Heritage reflects the incredible rarity of the diamond, which combines its remarkable size with exceptional colour and clarity, and at 507.5 carats it is the nineteenth largest gem diamond ever discovered. The Cullinan Heritage was recovered in September 2009 from Petra’s Cullinan mine in South Africa which has produced the majority of the world’s most famous and important diamonds," Petra said in a statement. The proceeds from the sale will partly help funding the development of the underground operations at Cullinan and the expansion project at the Williamson mine, both of which are important steps in taking Petra’s annual production from the current one million carats to over three million carats by 2019, it said.

Pangea DiamondFields Plc has agreed to sell its holding company Efidium Ltd to Sweden's International Gold Exploration AB, merging the two companies' diamond assets, in a share deal worth about $47.6 million, Reuters reported. The diamond explorer said IGE will issue 495.4 million new shares, which represents about 38.4% of IGE's enlarged issued share capital. The enlarged IGE will have nine diamond projects across Angola, South Africa and the Democratic Republic of Congo, the company said.

The Democratic Republic of Congo plans to make the cleaning of rough diamonds compulsory before export as part of a wider drive to raise minerals revenues, officials said, Independent Online reported. The move could raise the value of stones exported by the vast central African country, the world's No 2 exporter by volume, by 25%, boosting government tax revenues, but may also exacerbate the country's deeply rooted smuggling problems, the report said. "A decree is being prepared, we are awaiting its signature ... during the coming week," said Dona Kampata, head of the mines ministry's technical committee for planning and coordination. The process, known as acidizing, boiling or de-oxidizing, consists of plunging the diamonds in powerful acids to clear impurities. The practice is common in leading exporters such as South Africa because it enhances the value of the diamonds, but officials said Congo, the second biggest exporter after Russia by volume, would be the first country to require it, said the report. "You must remove all the impurities before the diamond can reveal all its glory," said Jean-Pierre Amuri, chief valuer at the government's precious minerals valuation body CEEC. According to the report, Antwerp diamantaires Bob Bonde and David Zollman established an acidization lab in Kinshasa last year. Congo produced 33.4 million carats of diamonds in 2008 -a fifth of world production, according to data collected by the industry monitoring scheme, the Kimberly Process. Around 21 million were accounted for as having been exported, valued at about $600 million, the report said. CEEC figures show the value of Congo diamond exports fell to $245 million in 2009, however, hard hit by the effects of the world financial crisis, it said. According to Amuri, washing diamonds could boost the value of Congo's exports by 20 to 25%, yielding a similar rise in export duties. Congo's tax rate on diamond exports is currently 3.75%, it said.