Diamonds losing glitter as global demand declines
Anglo American has reduced DeBeers' 2025 production plan by 10 million carats to reflect 'challenging rough-diamond trading conditions,' it said in its fourth-quarter operational report. The company's 2024 earnings before interest, taxes, depreciation, and amortization (EBITDA) will be 'marginally negative,' the parent company projected. It has been a crisis year. Sales for calendar 2024 fell 25 per cent to $2.72 billion. The average price index, which tracks like-for-like rough prices at sights across the entire year, fell 20 per cent compared with 2023.
The company is facing an inventory crisis with stock worth of $2 billion piling up, the largest since the 2008 meltdown. The downturn has reduced production by 22 per cent to 24.7 million carats in 2024, and cut its outlook for 2025 to between 20 million and 23 million carats, compared with an earlier forecast of 30 million to 33 million carats.
The diamond industry is no stranger to boom-and-bust cycles, but what the takeaway from the DeBeers saga is there is a significant and permanent change for the worse. The trickle of lab-grown diamonds has become a flood, rapidly squeezing out natural stones, especially in fashion jewelry and low-end engagement rings.
There has been a steady fall in the production of rough natural diamonds. The Argyle mine in Australia is depleted, and major mines in Canada are also nearing exhaustion. The ban on trade of Russian diamonds as a part of the Ukraine sanctions imposed by the West has knocked out a major source of roughs. Russia produced 37.3 million carats in 2023, or roughly 35 percent of the global production.
This has resulted in natural diamond production diving to 111.5 million carats, an eight per cent drop from 2022, and a 20 percent drop in value, the lowest level since the Kimberley Process began publishing data. Despite the lower supply, the average price of a diamond fell 14 per cent to $114 per carat.
On the other hand, the growth of the laboratory grown diamond is robust. From market sales valued at $22.79 billion in 2023, lab-grown diamonds are expected to grow to $74.45 billion by 2032. The growth projection for Indian lab-grown diamonds is $1,192.3 million by 2033 from $299.9 million in 2023 with the corporate backing of Tata Group's Trent and Senco Gold and Diamond. Pandora, the world's largest fashion jewelry company, too has launched a lab-created diamond line.
For decades, the jewellery industry has been defined by the phrase 'A Diamond is Forever'. This iconic slogan, created by copywriter Frances Gerety in 1947, has shaped the world's perception of Diamonds – they're eternal, durable, and always available.
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