DIAMOND DEPOSITS
ARE DEPLETING
Before your grandchildren buy their first diamond, most mines will be closed. By the time your granddaughter says “yes” accepting a ring with diamonds, most of them will come from the secondary market. No one has any doubts that we are witnessing incredible history – the decline of the age of uncut rough diamonds!
In cooperation with FCRF – a research foundation dealing with the evaluation of colour diamonds, we have developed a brief outline of the future awaiting the diamond industry. It is based on data from analyses and reports from the most important mines in the world. The last diamond, which will be extracted in about 60 years, will start a new era. Journey with us to the near future of the diamond industry. Is it going to be bright and pink, or maybe blue times are coming? Please feel invited!
Marcin Marcok, expert in the precious stones industry.
NATURE HAS THE FINAL WORD
Currently, forty mines generate 90% of the global diamond production, but only 13% of them have deposits which are rich enough to allow extraction for longer than 40 years. Within the next several decades, 98% of diamond mines will cease to exist. The legendary Karowe mine in Botswana, the origin of the world’s second largest diamond, is expected to be exhausted in about 20 years. Even within the next 5 years, a dozen or so important centres will disappear from the mining map. This will include the Argyle mine which is famous for its top-quality colour diamonds. Assuming that small, independent mines in various parts of the world will disappear much earlier, we will experience a substantial decrease in supply in the course of just a few decades.
IS THERE NOTHING MORE TO DISCOVER?
The Earth’s crust has been comprehensively analysed in relation to its mineral resources. It is certain that nobody believes in the discovery of a new “mega-mine” in the near future. Small and scarce deposits will be exhausted by the end of this century. Even the discovery of a new, large source would have no impact on the situation – it would not satisfy the demand even partially. In its annual report on the condition of global wealth, Credit Suisse noted that over a million new millionaires emerged in the United States in 2017. It is therefore clear that the remaining resources are too low to satisfy the appetites of collectors.
CRISIS OR CHALLENGE?
Nevertheless, we cannot assume that the changing situation is a big surprise for the industry or a sign of an emerging crisis. The natural course of things brings a new reality where the second-hand market is the largest active mine!
The changes will affect not only the approach to product sourcing but also conditions of its distribution. Extraction and mining-related technologies, like cutting, will gradually decline. A new profession will emerge – a broker of second-hand diamonds, and the market will open up on an unprecedented scale, mainly due to jewellery brands which will have to purchase diamonds from the public in order to maintain production.
The purchase and sales market operating today will change beyond recognition, but if companies develop effective strategies, the diamond trade will remain highly profitable.
SOARING PRICES
Depletion of resources and a limited number of stones available in the market will certainly lead to higher prices. Already today the number of middle class and very wealthy buyers is growing much faster than the pace at which stones are being extracted. Therefore, it is forecasted that even low-quality diamonds are expected to experience an unprecedented increase in value. The news about the last extracted diamond will reach us in 61 years at the latest. However, prices will soar much earlier, according to analysts.
The rarest stones will continue to be the most desired. Even today, the demand for pink diamonds is so high that their average price increases 12% year on year. Significant mines of clear diamonds will also be closed within the next decade, for example, Kimberley mine in South Africa. Therefore, it is beyond any doubt that the scenario of sharp increases in the price of all diamonds will become reality in the coming decades.
Together with the expected surge in demand, the value of your diamonds may also increase significantly. More money in consumers’ wallets and the decline in supply, will lead to a situation in which the next generation will be able to sell their grandmother’s ring with a 20-carat cut Fancy Vivid Yellow diamond at a price dozens of times higher than the price for which it was originally bought! Your collection of diamonds will probably become the most precious, highly mobile and trouble-free investment in the coming centuries.