On February 27, 2017, the New Year finally came by the Lunar Calendar. Today, when the Orient determines the global diamond market development trends, the Fire Rooster - the symbol of this year - hopefully will make the life of diamantaires brighter and replenish the diamond miners’ stocks with new carats.
Today, five largest companies lead the way in the global diamond mining: De Beers, АLROSА, Rio Tinto, Dominion Diamond Corporation, and Petra Diamonds that produce over three-fourths the diamonds worth of up to 90% of the world diamond value. Based on the reports made by these companies, it is possible to predict the total volume and the value of the rough diamonds mined in the world (Table 1).
Table 1
The largest world diamond miners in 2013-2016
The Table was based on the annual and quarterly statements of De Beers, Rio Tinto, Dominion Diamond Corporation, Petra Diamonds, АLROSA, and Catoca in 2013-2016.
* Rough diamond production/Rough diamond sales.
** Global Summary: Semi-Annual Production. Kimberley Process Certification Scheme. 2013-2015.
*** Author’s estimates.
As for the physical diamond production, in 2016, the ALROSA Group kept its global leadership by diamond mining volume achieved during the period of recovery from the crisis of 2008-2009. With account of the diamond production at Catoca, Angola, the Group produced over 42.7 mln carats of rough diamonds in 2016. The ALROSA Group’s sales compared well with the De Beers’ ones.
The rough diamond sales by the top global diamond miners in 2013-2016 are indicative of the favorable price trend in the rough diamond market. In 2016, De Beers sold rough diamonds for about US$6.1 bln, and the ALROSA Group – for US$5.0.
In view of this and taking into account the estimates of the state of the rough diamond business segments, the calculations of the diamond pipeline performance in 2016 were made, which allowed to specify the prognosis for the further changes in the global diamond pipeline segments through to 2030 (Tables 2, 3 and Figure 1).
Table 2
Global diamond pipeline in 2006-2016, US$ bln
* Global Summary: Semi-Annual Production. Kimberley Process Certification Scheme. 2006-2015.
** Chaim Even-Zohar. Diamond Pipeline, 2006-2015.
*** Author’s estimates.
Table 3
Global diamond pipeline estimates in 2016-2030, US$ bln
Figure 1. The diamond pipeline structure change in 2006-2016.
The diagram shows the growth in the diamond mining industry and the decline in the cutting industry starting from 2011. The share of the diamond jewellery sales during this period is about 35%. The world financial crisis of 2009 has substantially changed the diamond pipeline correlations due to the tailspin of the first two diamond market segments. It is evident that the cutting and polishing industry depends on the value of diamonds mined and diamond jewellery demand, so it is very susceptible to downturns.
The diamond production in Russia, in spite of the economic crisis in the country, should be maintained, and the world diamond production in 2017 will make 125 mln carats per year, but due to the excess of demand over supply, the value of the rough diamonds mined will continue its growth because the GDP increases in the leading world economies – the USA and China.
The value indicators of the cutting &polishing industry and the diamond jewellery sales will grow but to a lesser extent. According to the author’s expectations, the value of the rough diamonds mined will double by 2030, while the value of the polished diamonds manufactured will increase 1.5 times and the jewellery sales will grow by one third only.
Yuri Danilov, Ph. D., Director of “Expert” Information and Analysis Center at Ammosov North-Eastern Federal University
