Hope shimmers for troubled diamond market
Lewanika Timothy | Monday January 22, 2024 06:00
Signet, which is responsible for the sale of half of Botswana's diamonds in the retail market each year, shared signals of hope with both De Beers and local media during a round-table last week. Its CEO, Gina Drosos, said the global diamond market is entering a three-year period of recovery which will lead to a price rebound in the market and stronger demand for diamonds from this year.
“We had predicted that the world would go through a three-year period of price downturn following the pandemic and now that it is over, we predict a recovery for the next three years that will strengthen demand and help prices,” she said.
Drosos was in Gaborone to meet with De Beers.
The CEO said there is more reason to be optimistic that after the Group of Seven concludes its tighter sanctions on Russia-sourced diamonds, the market will overcome uncertainties around the issue, thus restoring confidence in the shiny stones.
“Consumers are currently worried about the use of unethical diamonds in the market,” she said.
“They want to be sure that the diamonds they are wearing are ethically source, and once there is a global agreement on diamond provenance there will be price recovery in the market.”
For his part, De Beers CEO, Al Cook said the medium to long-term outlook for diamonds continues to be marked by under-supply and high demand, noting that rough diamonds passed their peak production era in previous years, while market demand continues to grow.
This, he said, is the reason De Beers and government recently approved a $1 billion investment for the initial stages of the Jwaneng Mine underground project.
“We predict that production will continue to drop globally and that is why we are fast-tracking the underground expansion,” he said.
Local fiscal and monetary policymakers will be eagerly eyeing a potential rebound in global demand for diamonds, following the steep downturn last year. According to Bank of Botswana data, local diamond exports plummeted to a meagre P141 million in November, compared to P3.1 billion in October.
Rough diamonds prices and revenues for producers fell by double digits last year, largely due to high inventory levels of polished diamonds in the midstream, that section of the diamond pipeline occupied by cutters and polishers, who buy from mines and sell to jewellers.
The extraordinary post-COVID rebound for diamonds in 2022 increased supply into the midstream, which in 2023 encountered economic uncertainties in the United States, a softer-than-expected performance from China as well as the industry’s reputational knock from the continued flow of sanctioned Russian diamonds into the market.
With competition from synthetics also rising, the midstream and retail jewellers found themselves with higher levels of natural diamond inventory, forcing producers to curtail sales towards the end of the year.