TORONTO (miningweekly.com) – Chinese diamond demand could reach the same level as the US, the biggest consumer, in the next decade, De Beers MD Gareth Penny said last week.

In a video interview with London's Financial Times, he said at that stage China, including Hong Kong, would account for one-third of global demand for the precious stones as diamond engagement rings grow in popularity there.

"What we're now seeing, with China growing as rapidly as it is, [is] annual double-digit growth compounded over a period of five years," Penny told the Financial Times.

"We think you'll see greater China, including Hong Kong, at not dissimilar levels overall [to the US]...about a third of world demand in about ten years time."

Penny said 20 years ago, hardly any Chinese brides received diamond engagement rings, but now nearly half of the couples getting married in the eastern seaboard cities of Beijing, Shanghai, and Guangdong were buying them.

In 2009, the US accounted for about 40% of global consumer diamond demand, with China at around 6% to 7%.

In April, De Beers forecast China would account for 16% of global diamond demand by 2016.

Diamond prices last week vaulted to their highest levels since November 2008, according to Polished Prices figures. The index is now 9% above its starting level for the year, and is 11,4% higher, compared with the same time last year.

Penny, meanwhile, said diamond supply would decline in the future.

"These great mines that were discovered ten, 20, 30 years ago are not being replaced today. According to the data that is out there, we're going to see some significant declines in diamonds."

De Beers is emerging from a bruising recession, which forced it to tap its shareholders for $1-billion in a rights issue earlier this year. The company lost its title as the world's biggest producer last year, when it slashed production by half on the back of weakened demand.

Russia's Alrosa produced around 34-million carats in 2009, when De Beers produced 24,6-million carats.

Penny told the Financial Times De Beers' results had improved for the first half of 2010.

"We're going to post a pretty healthy set of results for the half year," he said.