21 May 2019
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ROUGH & TOUGH
LOWER PRODUCTION TO RAISE ROUGH PRICES
By: Diamond World News Service
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Apr 29 2019 2:58PM
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Reference: 18185  

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Top diamond miners, focused on future industry growth, are prepared to lower diamond production in 2019. Is this a deliberate and purposeful move, geared to raise diamond value and influence diamond rough prices or are the mines simply wearing down? The warning bells toll for the industry as rough prices are set to increase by the end of this year reports Aasha Gulrajani Swarup

Global diamond production decreased in 2018 with each of the top three miners, ALROSA, De Beers and Rio Tinto, who collectively account for more than half the global diamond production, reporting a decline in diamond production.This could well be the trend over the next few years.

“Top diamond miners are planning to bring down production to a third of current levels in the next decade to ensure that the diamond gets its true value,” Jean Marc Lieberherr, CEO, Diamond Producers Association, was quoted as stating in the Indian media.

The year 2017 saw the highest production of diamonds since 2008 and witnessed some of the largest diamond finds.

The supply did not help rough prices, which have plummeted over the last few years. In this scenario, production by top diamond miners is slated to go down further in 2019 as per the diamond production guidance issued by these companies.

Is this a deliberate attempt to lower production to raise rough prices in the face of record demand for diamonds? The three diamond mining giants, ALROSA, De Beers and Rio Tinto, however, attribute the decline in production on the mines.

“De Beers Group’s rough diamond production guidance for 2019 is in the range of 31-33 million carats (compared with 35.3 million carats of production in 2018). This reduction is a result of change in our mine portfolio and based on a computation of the availability from mine production that Source – Bain & Company; Kimberley Process accounts for the closure of Voorspoed Mine in South Africa in 2018, Victor Mine in Canada that will cease production in 2019, and the process for transitioning Venetia Mine, the largest mine in South Africa from an open pit to an underground operation, which will actually extend the mine’s life in the long term and increase the amount of carats we can eventually recover from it. The net effect of these changes forecasts a lower rough diamond carat production in 2019,” explains David Johnson, Head of Strategic Communication, De Beers Group.

Even Alrosa experienced mine issues. States Sergey Takhiev, Head of Corporate Finance for ALROSA, “Production decreased due to the shutdown of the Mir underground mine and the completion of open-pit mining at the Udachnaya pipe.”

Another top producer Rio Tinto too reported a diamond production 15 per cent lower in 2018 than 2017 at its Argyle mine in Australia while production at its Diavik mine in Canada was 3 per cent lower in experiencing a further drop in 2018 following the larger than normal supply of smaller, lower value rough diamonds.

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