Lack of new mines exacerbateS the situation
A stable to slow decline in diamond supply is expected in the future as older mines produce less of the sparkling stones.
De Beers Group CEO, Bruce Cleaver admitted as much at the 2019 Diamond Conference in Gaborone this week.
However, while the supply of diamonds is expected to slow down, Cleaver feels with the right investments and marketing strategies, demand should continue to increase.
“The younger generations, millennials, are the largest cohort of diamond buyers in the world,” declared Cleaver, adding the diamond industry was alive with opportunities but changes need to be made to embrace these opportunities.
He emphasised the importance of understanding the interaction between every stage of the diamond value chain, from the consumers all the way to mining.
“The new diamond world will be defined by enhanced efficiency and increase in technological innovation. So the focus should be on developing and growing industrial clusters that support the developments that will enable the diamond sector to compete with other fast growing industries.”
Cleaver further believes the industry must focus on bringing innovative, ethical and interesting products to consumers.
He stressed that none of this would happen unless there is better collaboration between the diamond communities.
“There are many forms of collaboration that I think will be necessary in the new diamond world. For example, collaborating with downstream entities to understand how consumers are evolving and what information is available to consumers to allow us to make any changes.”
Published this week, the Diamond Insight Report for 2019 forecasts global rough diamond production volumes will continue to decline gradually, with some mines slowly approaching the end of their lifespans and no major production assets coming into the stream in the near future.
According to the report, in 2018 global rough diamond production volume decreased, but the average value of carats mined increased. This led to a higher global production value compared to the previous year.
However, global consumer demand for diamond jewelry continued to grow in 2018, driven by sustained positive macro-economic fundamentals in the U.S and China.
The midstream, on the other hand, experienced challenges including a slowdown in demand towards the end of last year due to slightly lower than expected year-end holiday sales with the trend spilling over into 2019.
A significant cause of this is said to be oversupply of smaller polished diamonds.
Since the majority of these are processed in India, the depreciation of the Indian currency, Rupee and a reduction in Indian bank financing is thought to have exacerbated the issue.
Notwithstanding, it is expected the retail demand pull-through will rebalance the market in due course.