The Diamond Industry
Being the hardest naturally-occurring substance known to man, diamonds have also long been valued for their beauty and rarity. Diamonds are luxury products with unique attributes distinct from other commodities.
Rapid growth in emerging markets such as China and India, rise in demand from a new generation of customers - the millennials, and diamond trading regulatory initiatives such as the Kimberley Process has pushed the global demand for diamonds to unprecedented heights.
These factors, in combination with the gradual depletion of existing diamond supplies, support a consistent growth in demand and value of diamond stones.
SUSTAINABILITY OF DIAMOND MINING
The sustainability of natural diamond mining is of utmost importance to ensure the preservation of our planet and its resources for future generations. As a company, upholding these values is essential in promoting responsible mining practices that prioritise environmental protection, social responsibility, and ethical considerations.
We also strive to prioritise the well-being of local communities, fostering inclusive growth, and supporting their livelihoods. Furthermore, we uphold industry regulations and guidelines, such as the Kimberley Process, to ensure that our diamonds are ethically sourced. Our mission to maximise sustainability in natural diamond mining contribute to a greener and more equitable world.
VALUE OF A DIAMOND
Besides its rarity, the value of a diamond can be evaluated on the basis of four criteria - Carat, Clarity, Color and Cut, or, the 4C's.
The 4C's are the four characteristics of diamonds which are commonly used as the basic descriptors of diamonds. This system was developed by Gemological Institute of America (GIA) in 1953 and has since become an internationally-recognised standard to grade diamonds.
CARAT is the measurement of the weight of the diamond. There are five carats to a gram, and a carat is divided into 100 points. Carat measurement is an important factor which determines the price of the diamond. Because large diamonds are much rarer than small diamonds, the price increases greatly as diamonds increase in size.
CLARITY refers to the degree to which inclusions or blemishes are present in the diamond. When diamonds are formed naturally in rock formations under pressure, mineral elements or fractures may form within the diamond and these can influence the value of the diamond.
COLOUR refers to the difference between a colourless (blue-white) diamond and its transition to a yellow colour. Generally, the closer the diamond is to being blue-white, the more valuable it will be. Different laboratories have different colour classification systems. Additional colours also appear in diamonds and are referred to as fancy diamonds: red, green, purple, violet, orange, blue, pink and yellow.
CUT is the grading that describes how well the polishing of a diamond brings out its brilliance (resulting from both internal and external reflections), fire (the dispersion of light into the colours of the visible spectrum), and scintillation (pattern and flashes of light). Cut often refers to the diamond's polish, proportions and symmetry. The correct balance between the crown and the bottom facets using the correct angles is important.
CONFIDENCE The unofficial “fifth C” does not relate to the physical diamond, rather it relates to confidence in the source and grading of the diamond.
THE DIAMOND MARKET
With a positive consumer demand growth and a steady-to-declining global rough diamond supply, long-term growth in rough value is predicted for the next few decades.
Diamonds are luxury products with unique attributes distinct from other commodities. Demand for diamonds is very different from that of other precious metals with demand arising mainly from use in jewelry.
Diamonds are end-consumer products and compete with other discretionary products and services for a share of consumer spending. Estimated worldwide rough diamond production in 2019 was approximately 142 million carats with a total estimated value of approximately US$13.6 billion.
The USA is the world’s largest diamond jewelry market accounting for approximately 48% of the total market in 2019 (USD79 billion), whilst China, India and other developing countries have accelerated their contribution to the future diamond demand.
In addition, the industry’s marketing activities are expected to stimulate additional demand for diamonds across the market as a whole.
Confidence in long-term diamond demand is based on a number of factors:
1 Growth of global retail diamond jewelry market as a result of investment in marketing and promotion by the industry as a whole
2 Rapid growth in emerging markets (China and India), in addition to the return-to-growth in mature markets (USA and Europe)
3 The emergence of new diamond brands at retail level
4 Significant regulatory initiatives which increase trader and consumer confidence in diamonds, such as the Kimberley Process
5 Rise in demand from a new generation of consumers (millennial), of which the population totalled to 1.8 billion in 2020.
Current industry forecasts project a sustained widening of the supply and demand gap over the next few decades
Global supply of rough diamonds is expected to decline on average by 1-2% per year in 2016-2030 due to the aging and depletion of mine and the current low rate of new mine discoveries.
It has been estimated by Frost and Sullivan that the rough diamond demand will increase to 292 million carats by 2050 compared with the current demand of 155 million carats in 2018. With global supply falling to 14 million carats, it will result in a humongous 278 million carats of supply/demand gap by 2050. The supply/demand imbalance supports a positive outlook for rough values in the medium to long-term which estimates an average annual rate of 4-5% growth in USD nominal terms.