Editor’s Note
This article illustrates the profound human and economic disruptions caused by the pandemic, tracing the ripple effects from global supply chains to individual livelihoods. It highlights how workers in critical hubs like Surat, India, have been forced to abandon skilled trades for subsistence, signaling a potential long-term reshaping of the diamond industry.
As the coronavirus pandemic shook the global diamond industry, hastening the closure of mines from Lesotho to Canada and paralyzing supply chains, Rajen Patel switched from his trade as a gemstone polisher to cultivating peanuts.
Patel, who worked for a decade in Surat, India, where about 80% of the world’s diamonds are polished, joined the exodus of gem workers who left the city as virus cases rose. Now farming in his hometown, he has no plans to return in the coming months.
Diamond demand has plummeted during the pandemic, freezing sales and causing a significant drop in prices. And as temporary mine closures risk becoming permanent, workers are seeking new ways to extract more value from their gems.
The only bright spot has been steady demand for large, high-quality diamonds from wealthy investors, according to financial and sales data.
Prices for high-quality one-carat diamonds are continuously rising and are up 12% from early-year levels, in contrast to the still-low values of lower-quality stones of the same size, data from the RapNet trading platform shows.
But only a few mine workers are fortunate enough to have reserves of significant, high-quality diamonds, putting some producers at risk.
COVID-19 has forced producers to cancel or delay sales, and major diamond exhibitions were postponed due to health and travel restrictions. The few sales that have taken place showed that rough diamond prices plummeted between 15% and 27%.
Indian imports of rough diamonds fell from $1.5 billion in February to just $1 million in April, data from the Gem & Jewellery Export Promotion Council shows.
Antwerp, another global trading hub, saw rough diamond imports fall 20% year-on-year in the first half, according to data from the Antwerp World Diamond Center. The city’s polished diamond exports fell 46%.
In an attempt to survive, many mine workers want to change the traditional pricing landscape by securing a share of future polished diamond sales, and some are even trying to negotiate directly with luxury jewelry firms, according to Richard Chetwode, managing director of RCC Diamond Consultants.
The Australian firm Lucapa Diamond Co signed a deal with an anonymous “high-end diamantaire” to sell some of its high-value diamonds from the Mothae mine in Lesotho for $505 per carat, plus a 50% share of the margin on future polished diamond sales.
Lucara Diamond Corp, which has mining operations in Botswana, reached an agreement in July with the Antwerp manufacturer HB Group under which the miner’s diamonds over 10.8 carats are sold for a portion of the estimated polished price.