Editor’s Note
This article highlights the complexities of obtaining accurate market data in the diamond industry, citing factors like legacy stocks and trade flows that complicate analysis. It references the Kimberley Process as a key source for understanding the rough diamond trade.
Obtaining an accurate picture of the industry is a difficult undertaking. In addition to more or less reliable figures on global mine output as well as import and export flows, rough diamonds permanently in circulation from earlier mining periods and repeated imports and exports complicate the overview.
According to the Kimberley Process, a certification system launched in 2003 to curb the smuggling of conflict diamonds, rough diamonds of around 120 million carats with a trade value of 16.3 billion dollars were extracted in 2022. This value multiplies along the supply chains and processing steps until being set in a piece of jewelry. Russia and Botswana lead the ranking of producers, while India dominates in cutting.
About 60 percent of mine production is shared among the companies Alrosa (Russia), De Beers (Luxembourg) and Rio Tinto (UK/Australia). Experts, by the way, suspect a further 1.3 billion carats beneath the earth’s surface, with an estimated 600 million on or under Russian soil.
At the center of the Bloomberg story is the company De Beers, which recently had to admit a decline in rough diamond sales from 3.3 billion dollars the previous year to 2.5 billion dollars by the end of June 2023 when presenting its half-year figures. The group’s gross profit also plummeted by 63 percent compared to 2022.
In addition, the years 2021 and 2022 had been exceptionally good and hard to repeat. So, dampened consumer sentiment, coupled with a market correction after the pandemic high for gold, gemstones and (used) luxury watches. According to Bloomberg information, De Beers subsequently adjusted its selling prices per carat several times, for example from 1400 dollars (June 2022) to about 850 dollars in July of this year. However, this downward trend by no means affects all weight classes of diamonds, but more on that shortly.
In conversation with the US media, the company also conceded that the growing demand for lab-grown diamonds – with its subsidiary Lightbox, De Beers is also active here – had had a somewhat “cannibalizing” effect. Their share of the industry’s export revenue has increased from one to nine percent since 2017, and considering the lower price level of LG diamonds (“lab-grown”), their volume is likely to have increased very significantly. One of the largest producers in this field is China, followed by India and the USA.
The aforementioned increase in production and exports of lab-grown diamonds, especially within the last five years, has several reasons. The most obvious factor is the rapidly improving technology, which enables stones of the highest quality and in sizes beyond 30 carats. This led to growing interest from jewelry brands, which previously dismissed unsourced diamonds as “bling” for cheap decorative objects, discount precious items, or industrial purposes. This enabled the leap from the online shop for “trinkets” to the displays of jewelers and thus into the mainstream.