Editor’s Note
In a bid to stimulate market activity, the world’s leading diamond producer has announced significant price cuts. This strategic move, detailed below, comes amid a complex market landscape and could set a precedent for the industry.
The world’s number one diamond company is lowering the price of its stones by 10 to 15%. This decision was made in a gloomy context despite a return in demand ahead of the Christmas holidays. This strategic shift could push Russian Alrosa, the sector’s number 2, to follow the same path.
De Beers chose its December sale, the last of 2024, to lower its prices. Most diamond categories are affected, particularly those that have sold less in recent months. The idea is clearly to revitalize activity after months of weak demand, linked to inflation and the explosion in synthetic diamond production.
It will be necessary to wait until next week to see if these year-end “sales” were sufficient to attract buyers. Even with a 10 to 15% reduction, De Beers is still offering prices higher than those on the market where its stones are subsequently sold, whether resold rough or polished.
In recent months, some clients of the mining giant were reportedly forced to resell their stones at a loss, and this may be why they have been less active in previous sales.
Until now, De Beers did not want to touch its prices. The global number one knows it sets the tone. By maintaining a firm pricing strategy, the company wanted to stabilize the market until it finally gave way.
The timing raises questions, because at this time of year, sales of cut diamonds are rather dynamic, particularly in the United States, which buys between 55 and 60% of the diamonds placed on the market.
One circulating hypothesis is that Anglo American, the owner of De Beers, may need money and, according to some sources, asked the miner to act to replenish the group’s coffers. The group had also announced several months ago its intention to divest its diamond division.
This price reduction may also be a gesture towards Botswana – the country from which the majority of De Beers’ production comes – and Okavango.
explains an industry expert. The prices set by the global leader are therefore a real constraint for Botswana, which has suffered this year from a drop in its diamond-related revenues.
According to estimates communicated this week by the Ministry of Finance and relayed by the Bloomberg news agency, Botswana’s budget deficit for the current fiscal year is expected to more than double, reaching the equivalent of $1.4 billion.
While it may benefit Botswana, this reversal by De Beers could be less well received by the world number 2, Russian Alrosa, which has also maintained its prices this year and sold less.
Not aligning with De Beers today and keeping a higher price level means Alrosa runs the risk of selling even less in the coming months.
