Rough diamond production has been impacted by practical issues of working safely in the COVID world and ensuring that we continue to operate safely and responsibly. In addition to this, global supply volumes have been impacted by some mines coming to the end of their operational lives, such as Rio Tinto’s Argyle mine in Australia. Rough supply has also been impacted by natural issues such as high rainfall preventing normal mine operations.”De Beers GroupWith decreasing supply and increasing demand, diamond prices, particularly the roughs, are exhibiting an upward trajectory, impacting all stakeholders of the industry, including the end customer, discovers Suneeta Kaul

AS the year draws to a close, the diamond industry finds itself in a unique situation – high consumer demand, sharp rise in rough prices, steady increase in polished prices, and a marked fall in supply of both roughs and polished stones. Add to this the onslaught of Omicron, the latest COVID variant, and the scenario becomes even more volatile.However, it is not an all-negative mix – there are many opportunities for all stakeholders and the industry as a whole. But the problems are very real, starting with the very pronounced demand-supply mismatch. The pandemic caused huge disruptions in mining operations, resulting in severe supply problems. The curtailed supply, in turn, has led to a sudden increase in rough prices, and an appreciable rise in polished prices as well.

Sharp spurt in rough prices
Historical data reveals that prices, particularly of polished stones, have been more or less stagnant for the past 8-10 years, and a rise was always around the corner. But what has upset the apple cart is the sudden sharp increase. The industry would have been more comfortable with a gradual upward trajectory, but it now has to face a three-pronged situation – fall in supply, rise in prices, rise in demand. According to a spokesperson of the De Beers Group, “Rough diamond production has been impacted by practical issues of working safely in the COVID world and ensuring that we continue to operate safely and responsibly. In addition to this, global supply volumes have been impacted by some mines coming to the end of their operational lives, such as Rio Tinto’s Argyle mine in Australia. Rough supply has also been impacted by natural 39issues such as high rainfall preventing normal mine operations.“Rough diamond sales have been influenced by positive consumer demand, resulting in positive recovery in downstream demand and pipeline inventory levels, which are lower, following the midstream de-stocking that took place in 2020, when limited amounts of fresh supply were entering the pipeline.”