De Beers, the world’s leading diamond miner, is upbeat that the demand will rise by 20 percent annually, driven by China and India, putting pressure on the miners to find new mines of the size of Orapa and Jwaneng.
De Beers Consolidated Mines’ Chief, Phillip Burton, told a team of Botswana journalists in Johannesburg last week that the demand for diamonds shot-up this year as cutters and polishers are beefing up the stock following the worst recession since the Great War.
“What we are seeing is the restocking of the pipeline as the economies of the world are improving,” he told journalist at De Beers’ headquarters.
He said the strong demand is being driven by India and China, but comes at a time when production on the other hand is flat because they are no new significant mines being found around the world.
His comments come at a time the executive director of De Beers, Stephen Lussier, praised China and India for driving the demand up at a time when the mature markets of the United States of America are experiencing sluggish demands.
“China and India are the driving force, and China is the most visible increamental demand driver,” he told Bloomberg in New York last week.
De Beers is 45 percent held by Anglo American, 40 percent by Oppenheimer family while the remaining 15 percent is owned by Botswana government following the debundling of the company’s complex structure in 2002.
De Beers, which produces 40 percent of the world diamonds, said China and India together might rival the United States of America in the next decade in terms of diamond demand.
According to reports, China’s share of jewelry is expected to jump up by 16 percent after 2015 from eight percent this year while India is expected to rise to 11 percent from 2015 from seven percent this year.
“We are seeing some high end consumers return to the market partly because they have confidence and are seeing volatility in the market and a potential of inflation,” Lusseir said.
De Beers’ sales of unpolished and uncut diamonds shot up by 84 percent in the first half of this year driven by demand in China and India. The output more than doubled to 15.4 million carats year ÔÇôon-year.
The company is spending US $ 60 million annually in exploration exercise across Southern Africa and Canada.
Last year, the company was forced to temporarily shut the mines in Botswana and Namibia in a bid to safe cash in a recessionary year. In South Africa, it had to rationalize its operation, sell company planes and reduce production from 15 million carats down to 7 million.
“Our prices have risen 25 percent and are back at the pre-Lehman Brothers’ levels,” Lussier said referring to the collapse of the USA investment bank that hastened the global economic crisis.
“There is still strong demand so we expect to finish this year in a very good place,” he added.
However, the USA, which accounts for 50 percent of world diamond market, is only expected to grow by four percent this year. (Additional reports Bloomberg)