De Beers, which is the leading diamond producer in the world in terms of value, said last year’s global rough diamond output was about 146 million carats, a far cry from the 2005 peak of over 176 million carats.
The group said in its “diamond insight report” that overall diamond supply was expected to increase moderately in the next few years, driven by new projects coming on-stream.
This insight report was the first in an annual series, designed to add depth and detail to other industry information sources.
“By 2020, when many existing mines will begin to see declining outputs, overall supply will be likely to plateau and, unless major new discoveries are made in the coming years, supply can be expected to decline gradually from 2020,” said De Beers, which is 85 percent owned by Anglo American.
“Diamond production is becoming increasingly challenging as mining moves towards deeper, less profitable and more remote sources of diamonds.”
Demand soaring
The group also said that consumer demand for diamonds had shown positive nominal US dollar growth in the last five years, with compound annual growth in diamond value just under five per cent from 2008 to 2013.
“In this period, growth was driven mainly by the emerging economies of China and India, as well as the US, since 2010, while Japan and the main European markets have shown below average growth trends in this period,” it said.
The world spent $79-billion on diamond jewellery in 2013, when sales of polished diamonds in the US increased 7 percent and after domestic diamond jewellery markets grew by a compound yearly growth rate of 12 percent in local currency terms in India and China between the years 2008 and 2013.
De Beers said China continued to be the world’s fastest growing market for diamond jewellery sales, and one in six diamond jewellery purchases in the US are now made online.
Meanwhile, the group said the cutting and polishing remained “fragmented”, with midstream companies under pressure from a combination of increasing costs in the upstream, the availability of credit and price-point requirements from their retail customers.
“The financing challenges are increasingly critical and could intensify over the coming years, as banks apply more stringent lending standards to the cutting and polishing industry,” it said.
Mathew Nyaungwa, Editor in Chief of the African Bureau, Rough&Polished
