De Beers CEO Philippe Mellier
Photo by: Duane Daws
JOHANNESBURG (miningweekly.com) – Global 2013 rough diamond carat production was still well below the 2005 peak of 175-million carats, at a time when global diamond jewellery demand had reached record highs, De Beers said on Wednesday.
Releasing its inaugural Diamond Insight Report, which highlighted the need for industry investment to sustain future success, the diamond company headed by CEO Philippe Mellier said that the world spent a record $79-billion on diamond jewellery in 2013, when sales of polished diamonds in the US increased 7% and after domestic diamond jewellery markets grew by a compound yearly growth rate of 12% in local currency terms in India and China between the years 2008 and 2013.
Although global production of rough diamonds increased 7% last year to 145-million carats, this still fell 30-million carats short of the 175-million carat production peak of 2005, said the report, which did not expect new production coming on stream to fill the gap left by reduced supply from existing sources.
Instead, diamond supply was set to plateau in the second half of the decade, before declining from 2020 onwards, said the report published by De Beers, an Anglo American group company.
Substantial investment would be required in diamond production, technology and branding, marketing and retail standards if the industry was to sustain its recent levels of success into the future.
With diamonds’ share of advertising voice in the US market having reduced within its competitive set, increasingly strong and sophisticated competition from other luxury categories was being faced.
China, where the number of diamond jewellery retail stores in the country increased by nearly 30% from 2010 to 2013, continued to be the world’s fastest growing market for diamond jewellery sales, and one in six diamond jewellery purchases in the US – the world’s largest diamond jewellery market – are now made online.
The Internet was also being used in China by a quarter of acquirers for research purposes before purchase.
On the supply side, diamonds were continuing to buoy the economies of producing countries, with diamonds last year making up 25% of the gross domestic product (GDP) and 75% of the overall exports of Botswana and 8% of the GDP and 20% of all exports from Namibia.
Consumer demand remained the one true source of value for the diamond industry, said Mellier, who cautioned that the industry would continue to lose ground to other categories if it did not invest significantly in production, marketing and technology.