Modern Mining October 2023

COMMODITIES OUTLOOK

Navigating uncertainty: Current state and future prospects of the diamond industry In recent times, the diamond industry has faced a series of challenges that have led to a notable shift in its landscape. From a 15 to 18% reduction in diamond prices over the past year to the unsettling decline in pricing and volumes at market tenders among major mining companies, the industry is amidst a transformation that demands careful analysis and strategic foresight, write Servaas Kranhold, Head of Natural Resources and Jacques Barradas, Partner: Natural Resources, at BDO South Africa.

Jacques Barradas: Partner: Natural Resources.

Servaas Kranhold: Head of Natural Resources.

Synthetic diamonds have contributed significantly to the volumes.

T he diamond market has experienced a notable downturn of late, largely attributed to a con fluence of macroeconomic factors. The US market, for instance, is an historically robust consumer of diamonds that’s been grappling with recessionary concerns, impacting the demand for Gem quality diamonds. In addition, China’s econ omy, while recovering from its zero Covid policy, has not rebounded as swiftly as anticipated, leading to subdued demand. These factors have combined to

create a complex environment for diamond traders, causing prices to stagnate and volumes to decline. Coinciding with a contracting market is an increase in diamond supply. Notably, synthetic dia monds have contributed significantly to the volumes, posing a considerable challenge. The inability of current mining technology to consistently differen tiate between synthetic and natural diamonds has led to further price suppression. This scenario has been compounded by the emergence of new min

The diamond market has experienced a notable downturn of late.

ing operations, such as De Deer’s Venetia underground mine and the return of Russian diamond sources. With softer demand and increased supply, the industry faces a formi dable task. In the face of these challenges, the diamond industry is undergo ing a fundamental transformation. Mining companies are re-evalu ating their operational strategies to remain competitive in a low price environment. Many have shifted from open-cast mining to underground operations locally, embracing technological advance ments such as remote mining to reduce costs. This shift in approach signifies the industry’s resilience and willingness to adapt to chang ing circumstances.

8  MODERN MINING  October 2023