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The Diamond Market

There is a positive long-term outlook for the rough diamond market due to inherent production constraints which suggest that supply will struggle to keep pace with demand.

Many of the world’s major diamond mines are in decline and cannot maintain previous high levels of output. Whilst some new mines are planned to come on stream in the coming years, there is nothing of significant size to make up for this shortfall and there have been no important new discoveries since the early 1990’s.

Meanwhile, demand for diamonds continues to rise, in both established markets, such as the US and Japan, and new markets, most notably China and India. Demand growth for diamonds in emerging markets is expected to continue as global wealth and consumer spending increase.

Whilst the rough diamond market is dominated by the three major producers – De Beers, Alrosa and Rio Tinto – which accounted for circa 60% of world supply by volume (based on 2012 Kimberley Process diamond supply statistics), none of these companies can be invested in directly in order to gain direct exposure to diamonds.

A key characteristic of diamond deposits is their scarcity, in contrast to many other commodities, and there are less than 30 significant diamond mines operating in the world today. To date, the most important discoveries (other than Argyle in Australia) have clustered into three regions of the world: southern Africa, Siberia, and western Canada.

 

Source: Petra Diamonds

Read a more detailed review of the diamond market from Petra’s 2013 Annual Report here.

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