Synthetics to ‘affect’ diamond mining in southern Africa, Botswana to feel greatest impact

Diamond producing countries in southern Africa are set to be “affected” an increase in gem-quality synthetic diamonds, with Botswana to feel the greatest impact.
The Botswana Institute of Development and Policy Analysis (BIDPA) was quoted as saying by Mining Weekly that synthetic diamonds could represent about one-third of mined diamonds by 2018.
“Assuming that these long-term projections of excess demand are correct, the shortage of mined diamonds will create a natural space for synthetics, which, depending largely on consumer acceptability, could grow to represent one-third of the gem-quality market by 2018,” said Bidpa senior researcher Professor Roman Grynberg.
“It has been assumed that the excess demand will generate significant increases in prices but, increasingly, there is the view that excess demand will result in a higher rate of penetration of synthetics into the market, which may well result in a decrease in prices at the bottom end of the gem-quality diamond market.”
He said any decline in prices would affect not only mineral taxation, but also returns on investment in Botswana’s diamond sector. “It does not require significant analysis to realise that Botswana, the world’s most diamond-export-dependent country, is simultaneously the most vulnerable to any supply shock stemming from synthetics because it has the least diversified economy of all diamond producing countries,” he said.
Diamond exports constitute about 50 percent of Botswana’s total revenue.
The country shipped diamonds worth $842-million last year.

Mathew Nyaungwa, Editor in Chief of the African Bureau, Rough&Polished