By Leia Michele Toovey- Exclusive to Diamond Investing News

The Christmas buying season upon us, jewellery companies that would typically have their biggest sales of the year are bracing for disappointing numbers.

A study completed this fall by the Harrison Group and American Express Publishing found that of all the luxury categories, jewellery could take the biggest hit in the downturn. Planned spending by affluent consumers on jewellery was down 15 per cent from last year-the worst of any category except sport-utility vehicles. Last week’s jewellery auctions in Geneva suggested that things could be even worse. About half the items up for auction failed to sell, and for those that did the prices they fetched were down 20 to 30 per cent from last year. On the whole, jewellery falls into that most unfortunate of categories for a downturn-completely unnecessary and highly expensive luxury goods purchased solely to show status or wealth.

In a tribute to how tough things are going, the diamond giant DeBeers Canada has cut production ahead of the holidays; an extreme rarity.  De Beers expects to cut production at its two new Canada mines between 10 per cent and 20 per cent due to the recent drop in demand.  This decline in output comes following a recent pledge by De Beers Group Managing Director Gareth Penny to Diamond Trading Company (DTC) sight holders that the company would curtail operations during the current economic slump, and use the period of low demand to carry out maintenance on its mines.

The Diavik Diamond Mines Inc. of Canada produced 2.321 million carats of diamonds during its third quarter, 25 per cent less than one year ago.  In its third-quarter update Diavik Diamond Mines put its year-to-date production total at 6.628 million carats, a decline of 26 per cent from the first nine months of 2007.

ALROSA will also reduce the volume of rough diamonds that it releases to the market, and at the same time will increase the amount of funding it earmarks for marketing and promotions. ALROSA president Sergey Vybornov said that news can be expected in December about the establishment of a “Diamond Guild,” which is expected to manage the all-industry marketing effort to promote diamonds.

BHP Billiton has elected to buy into Peregrine’s Chidliak project in Nunavut, Canada. BHP exercised its right to earn 51 per cent in the diamond development project outlined in a 2005 agreement between the two companies. The agreement called for BHP to incur a total of $22.3 million in future exploration expenditures on the property in order to earn a 51 per cent interest, with a minimum commitment of $8.9 million.  Following BHP’s commitment, Peregrine said the two companies are now finalizing an “aggressive” exploration program which will focus on further evaluation of the three known kimberlites on the site. While Peregrine will continue to act as operator of the Chidliak exploration program, BHP is entitled to become the operator at any time while it is sole-funding operations.

Rockwell Diamonds said Monday it will shut down operations for an extra three weeks at the end of this year as it works to conserve cash during weak market conditions for rough diamonds. “Diamond prices are under pressure and sales prices achieved by diamond producers in the past six to eight weeks have been well below those achieved prior to October 2008,” said John Bristow, President and Chief Executive Officer of Rockwell. “Given current market conditions and the uncertainty as to the longer-term situation, we believe that it is prudent to proactively conserve cash and plan operations to best deal with the current economic conditions.” The company plans to close operations on November 28 and resume on January 5, 2009, rather than its previously scheduled two-week break. It will carry out maintenance and repair at its mines from December 1 to December 5.