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“Outlook for Diamond Market Positive”
The head of the emerging mining company shares his views on the prospects of different segments of the pipeline with M.D. Dewani and explains why he is confident of a positive future.
By: Johan Dippennar CEO, Petra Diamonds
Jan 13 2011 5:29PM
Reference: 5650  


“The outlook for the diamond market is positive with a significant supply-gap anticipated in the coming years, as demand continues apace in the emerging markets,” says Johan Dippennar, CEO of Petra Diamonds which is emerging as a new producer and supplier of rough diamonds. With this perspective, Petra plans to steadily increase its rough production and develop the company’s stature as an important supplier to the world market.

The CEO shares some of his views about current and anticipated market trends.

The US Market:

The diamond market and rough diamond prices (if we are referring to the rough prices in the US market, then we should specify what quality of rough, not sure if there is much rough business in US other than the large sizes), he says, have already recovered strongly in the important US market in 2009-10, as evidenced by the steadily increasing volume and value of polished diamonds (sounds a bit different from ground realities)and improved sales reported there by leading diamond retailers.

Festive Season Expectations:
As the diamond market now enters the pre-festive season, Dippenaar adds, expectations are for a continued improvement that could end with robust retail sales in the fourth quarter.

Production Trends:
He believes that though production of rough diamonds according to K.P. data, declined 25 per cent to 125 million carats (worth US$ 8.6 billion, giving a global average value of US$ 69 per carat), the supply is expected to be considerably higher in 2010 though this might not reach the previous high of 168 million carats, valued at US$ 11.9 billion in 2007. He expects global production may rise to around 140 million carats (valued at US$ 11bn) by 2011 and might then remain flat for some years, before starting to decline again.

Supply side constraints, according to him, are mainly due to the fact that the world’s largest diamond mines are now past then peak, and can no longer be operated at previous levels of production. Besides, in some cases, open-pit operations have to move underground. This may naturally limit the volumes which can be extracted from the ore-body.

Whilst some underground mines may now be coming on stream, in the next few years, current estimates, according to him do not forecast significant new supply to counter-act the present declining trend.

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