Rough diamond prices to skyrocket in 2018

A steady diamond demand in the United States, paired with an ever growing appetite for these precious stones in China and India, are some of the main factors expected to cause a major gap in global supply and demand, sending rough diamond prices through the ceiling by 2018.

That is the main conclusion of a recently published report by Bain & Company and the Antwerp World Diamond Centre (AWDC), which also warns of major consequences of this sharp price increase for industry players up and down the value chain.

In Global Diamond Industry Report 2013, the authors forecast that rough diamond production will grow at an average annual rate of 4.8% from now until 2018, reaching a peak level of 169 million carats and a production value of $19.6 billion. This could be good news for African producing nations such as Zimbabwe, Botswana and the Democratic Republic of Congo (DRC).

According to expert in the field, Paul Zimnisky (see table below), these countries, together with Russia, are estimated to account for 84% of expected global 2013 diamond production of 130 million carats.

Only this year, he says, Zimbabwe’s Marange diamond fields are projected to produce 16.9 million carats, which would make the project the largest in the world in terms of carats produced annually. Those totals could be as high as 30 to 40 million carats annually if current restrictions did not exist, he adds.

DRC, the second largest diamond-producing nation in the world, generated 21.5 million carats last year. But since and a third of the country’s diamonds are believed to be smuggled, quantifying net production is difficult.

Botswana’s mines, being Orapa the world leader in terms of total diamond value produced annually, are forecast to produce just over 11 million carats this year. And starting in January 2014, the country will host De Beers’ famed sights, which means the world’s leading diamantaires will gather there 10 times a year.

But none of these numbers seem to mean much to Bain & Co. By 2019, they say average rough diamond production inevitably will begin to drop 1.9% a year, levelling off at 153 million carats in 2023, with a production value of $18.4 billion.

Image by RTimages/ Shutterstock.com

Table by Paul Zimnisky.