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

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Tiffany Ribbons Diamond Necklace
Tiffany Ribbons Diamond Necklace
The report believes that 2017 was the pinnacle production level for the natural diamond supply. From here on, output is expected to remain stable at best. Miners’ plans and actual production volumes in the first half of 2018 suggest production may even decline in the near future.

The most significant decreases are expected from Mirny in Russia and Voorspoed in South Africa, resulting from their closure; Jubilee in Australia from lower-grade mining; and Argyle, also in Australia, because of depleted reserves in its block cave. Meaningful increases are expected from Orapa and Jwaneng in Botswana.

Currency adjustments in production countries lowered the EBIT margins (earnings before interest and taxes) for De Beers Group and ALROSA in 2017. ALROSA returned to positive in the first half of 2018 and maintains the highest margin in the segment, attributable to rises in rough diamond prices, currency devaluation and strong cost containment. Petra reported negative EBIT margin in 2017 but rebounded in 2018. Merger and acquisition activity was focused on the mining segment, with key industry players investing in mining resources and operations. De Beers Group purchased Chidliak, a diamond resource in Canada; ALROSA increased its shares in Catoca from 33 per cent to 41 per cent .

Cutting and polishing
Healthy growth in the diamond jewellery retail market supported a 2 per cent increase in cutting and polishing revenue, putting the segment on positive ground in 2017.

While the cutting and polishing segment grew overall, profit gains in 2017 were mostly limited to producers of small stones. Companies that specialize in large, high-quality stones experienced pressure from retailers in 2017. That trend reversed in the first part of 2018. To sustain profitability, cutting and polishing companies are focusing on four strategies: managing inventory levels, shortening production cycles, optimizing yields and expanding operations. Technology is leading improvements in the cutting and polishing segment, from digitally mapping and modeling stones to automating cutting processes.

Because of its low labour costs, favorable regulatory environment and relatively easier access to financing, India continued to gain market share in 2017. India’s growth came primarily at the expense of China and other countries. India accounts for more than 90 per cent of global polished diamond manufacturing by value, and it dominates in all size segments, including the value-add segment of larger stones.

In China, cutting and polishing revenue increased in 2017, backed by strong domestic jewellery demand.

Access to affordable financing continues to be an issue for some midstream players. Following several defaults in India, some banks have tightened credit requirements. However, transparent and financially healthy players in the cutting and polishing segment reported only limited influence on their ability to secure funding.

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