23 Jul 2019
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The Global Diamond Industry 2018: A Resilient Industry Shines Through
Bain Report
By: Diamond World News Service
Mar 18 2019 12:50PM
Reference: 17076  

Bain along with Antwerp World Diamond Centre (AWDC) presented its 8th annual report on the global diamond industry. The highlights of the report include the increasing influence of digital technologies, the growing trend of lab-grown diamonds & the shifting preferences of younger generations of consumers. Over all, the report suggests that the long-term outlook for the diamond market remains positive.

Recent developments in the diamond industry
Every segment of the value chain improved in 2017, with industry revenue growing around 2 per cent. In 2018, the report expects revenues to continue to trend upward, and project accelerated growth in the mining and jewellery segments. Revenue for rough diamonds increased, continuing a climb that started in 2016. Revenue growth for rough diamonds is largely attributed to increased production by smaller players. The top five mining company aggregates faced unfavorable exchange rates in 2017, which contributed to lower profit margins of about 5 per cent.

Cutting and polishing revenues increased slightly in 2017 due to healthy demand, marking a turnaround from prior years. Average profitability was stable at 1 per cent to 3 per cent, with the most efficient players delivering margins of around 10 per cent. The report expects cutting and polishing profitability to improve in 2018, supported by rising prices for polished diamonds and increased demand for diamond jewellery. Midstream inventory has increased in anticipation of higher demand, particularly in lower-quality and smallersized assortments.

Global retail sales of diamond jewellery increased in 2017 due to a strong economy in the U.S., the world’s largest diamond jewellery market. A resurgence of luxury spending among Chinese millennials also contributed to the increase. De Beers Group launched Lightbox Jewelry, a lab-grown fashion jewellery retailer with a new linear pricing model and no grading reports for its products, in September 2018. Along the value chain, companies are evaluating how to strategically respond.

Performance across the value chain was strong during the first half of 2018, with accelerated growth expected among mining companies and jewellery retailers.

Rough diamond production
All of the top mining companies increased production in 2017, leading to an unprecedented 19 per cent growth in rough diamond production; volume reached 151 million carats in 2017, breaking an eight-year trend of flat output. However, the increase was largely attributed to the processing of lower-quality supplies and tailings, diminishing the effect on revenues.

Canada, the Democratic Republic of the Congo, Australia, Botswana and Russia accounted for 90 per cent of the output increase in 2017. Canada led the way, with the largest production increases coming from commercial mining efforts in Gahcho Kué and Renard, both of which started production in 2016 and early 2017.

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