Excerpt from Northern Miner In its first detailed public report on the state of the diamond industry, diamond miner and retailer De Beers paints a picture of an industry that will likely struggle to meet demand while facing increasing competition from other luxury products.
Global diamond jewellery sales — which reached a record US$79 billion in 2013 — is expected to grow, in particular in China and India.
“Even under scenarios of volatile or weaker global economic growth, demand for diamonds is expected to show positive real growth in the next decade,” De Beers’ Insight Report says.
China now accounts for 13% of total demand, up from less than 3% a decade earlier, and De Beers CEO Philippe Mellier sees Chinese demand growing at more than 10% annually for many years. There is a lot of room for growth in China, as personal ownership rates for diamond jewellery in top urban cities surveyed is 20% — up from 10% in 2003, but still far below the U.S. rate of 70%.
On the supply side, meanwhile, rough diamond production peaked at 176 million carats in 2005 and likely won’t revisit such highs again.
Rough diamond production increased by 7% to 146 million carats worth US$18 billion in 2013. It is projected to rise over the next several years as new mines come on-stream, with production peaking in 2020.
Unless major discoveries are made soon, production is likely to decline after 2020.
At the same time, diamond production will become more costly as mines mature and become more complex, deeper and more remote.
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