After an “exceptionally bad year”, De Beers, the world’s largest diamond producer, says falling supply and a rise and demand should improve the outlook for diamonds.
De Beers Group managed operations CEO Moses Madondo said an expected decline in diamond supply should create supply pressures and price growth potential.
Speaking at a recent mining conference in Johannesburg, Madondo said they believed the world had already passed the peak for diamond supply despite extensive exploration.
“There has been only one commercial discovery in the 21st century, the Luele mine in Angola, where we hope to begin production by the 2030s. But the broader outlook shows a decline in global production,” he said.
According to Kimberley Process statistics, global diamond production in 2023 decreased 8% to 111.5-million carats compared to 2022.
During the Covid-19 pandemic, many people were not able to travel and opted to spend money on luxury items such as diamonds.
— De Beers Group managed operations CEO Moses Madondo
Madondo said they expected four broad phases in the supply outlook between 2024 and 2040.
Between now and 2025 they expect to see a dip in production due to the closure of some mines such as Renard mine in Canada. The decline will also be due to market-driven production cuts this year in response to current challenging market conditions.
In 2025 there was likely to be a temporary increase in production due to ramp up at Luele mine in Angola and Venetia underground mine in SA, but the trend turns downward again in 2026 with the expected closure of Diavik mine in Canada.
From 2028 to 2032 supply was expected to drop quickly due to mine closures in Canada and Russia and then there would be a more gradual decline over the next 10 years mostly due to more Russian mine closures.
In contrast, they expected the demand for natural diamonds to grow by 3% annually to 2030 driven largely by demand from the US and strong demand growth from India. “We know [demand in] China is under pressure, but we do expect some growth over the outlook period,” he said.
This swing in the diamond market will come as a relief for producers after the decline seen in 2023.
In 2022, the total global demand value of new polished diamonds amounted to about $27.8bn, which dropped by about 9% to $25.2bn in 2023.
“2023 was an exceptionally bad year for the diamond industry, but this followed two years of record demand for natural diamonds when, during the Covid-19 pandemic, many people were not able to travel and opted to spend money on luxury items such as diamonds.”
The success of preceding years, said Madondo, became a burden as heavily stocked inventories led to a decline in demand.
According to the company’s financial results, De Beers, which produces about 33% of the world’s diamonds, saw its total revenue decrease about 35% in 2023 to $4.3bn due to the downturn in industry conditions from 2022 to 2023.
The group’s total rough diamond sales volumes decreased by 19% to 24.7-million carats (ct). The average realised price decreased by 25% to $147/ct, “reflecting a larger proportion of lower value rough diamonds being sold, as well as a 6%, decrease in the average rough price index”.
During 2023, said Madondo, US consumer demand for natural diamonds was affected by macroeconomic challenges and a rising supply of lab-grown diamonds. In China, economic challenges led to low consumer confidence, which led to marginal consumer demand contraction off the subdued levels seen in 2022.
This downturn has continued in 2024, but expected a return to growth in 2025, he said.
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