Between 2023 and 2028, the rough diamonds market is expected to see a significant uptick due to factors this article will explore, including growing demand for uncut and polished diamonds alike, smaller diamond companies increasing their diamond production, and price fluctuations in the diamond market.
What are the implications of these changes for diamond jewelry companies and auction houses?
This question is worth exploring in depth. After all, what happens with the rough diamonds industry can reshape the trajectory of the entire diamond market as we know it.
Numerous recent reports suggest the market for uncut diamonds is on a promising growth path—this is good news for diamond companies, jewelry companies, and auction houses.
According to a study referenced on News Channel Nebraska, there’s an anticipation of substantial growth over the next five years.
Fueling this demand for uncut diamonds? Increased consumer demand and, interestingly, a rising interest in raw, uncut diamonds for bespoke jewelry pieces. This trend creates an opportunity for auction houses to feature unique rough diamond pieces to cater to an evolving clientele.
While growth comes with opportunities, it can also come with challenges. One such example is the transformational agreement between diamond mining giant De Beers and Botswana.
In a defining moment for the diamond industry, De Beers and Botswana inked an agreement reflective of the pressures from declining diamond prices and increased competition.
While Botswana provides 70% of De Beers’ rough diamonds, the country’s economy relies heavily on these sales. Diamond mining accounts for roughly a third of Botswana’s GDP, playing a significant role in elevating the southern African country to its status as the continent’s sixth wealthiest nation.
As the deadline for a new agreement approached, Botswana’s President Mokgweetsi Masisi expressed concerns about the terms with De Beers, emphasizing the need for a more equitable distribution of rough stones. Consequently, De Beers made adjustments to their proposal.
Al Cook, De Beers CEO, highlighted the mutual importance of reaching an agreement in a statement to Reuters: “There was… a desire to cooperate and reach a deal. The opposite would have been very damaging for everyone concerned.”
Botswana’s negotiation skills resulted in securing a substantial increase in its diamond production share from their Debswana joint venture, set to rise to 30% soon and 50% by 2033, up from the current 25%.
Further, Botswana clinched multi-billion dollar commitments to prolong the operational life of its Jwaneng diamond mine, one of the world’s most prosperous.
Analysts express mixed sentiments about the deal. While some foresee financial strains for De Beers, others acknowledge the avoided potential dispute’s value. Cook summarized the agreement as a win-win, meeting the needs of both De Beers and Botswana.
The rough diamonds market has seen its fair share of price alterations. These fluctuations haven’t come as a big surprise to most diamond businesses: during the pandemic, rough diamond prices soared to an all-time high alongside other diamonds. Like most industries that experience drastic upticks in sales during major world events, prices were expected to come down eventually.
Despite knowing those high prices were unlikely to last, auction houses, in particular, need to adapt to these price changes quickly, ensuring they offer competitive bids and valuations. While periodic price changes are a market norm, it’s the magnitude and speed of some of these adjustments that capture industry attention.
For instance, the anomalies we observed in February 2022 stand out as unique rather than representing a typical trend in the rough diamond market.
Importantly, these larger-than-usual fluctuations don’t imply the rough diamond market is inherently volatile—they tend to be quite the opposite. Rather, they underline the importance for diamond companies and jewelry makers to be attuned to market signals and adjust their pricing strategies prudently.
Unsurprisingly, with the uncut diamond market expanding, the manufacturing segment isn’t far behind.
The growth in the rough diamond sector is not isolated to rough diamonds either—various verticals are supporting an increase in diamond manufacturing activities. This surge is excellent news for the diamond supply chain as a whole, from miners to retailers. It allows businesses to expand their offerings and cater to a broader audience.
Again, however, this is not without its challenges.
With increased manufacturing comes the demand for improved infrastructure, skilled labor, and more sustainable practices. Diamond jewelry companies, which often source directly from these manufacturers, must be extra vigilant about quality control, the provenance of their gems, and sustainable diamond manufacturing practices.
In its shimmering allure, the rough diamond market remains as dynamic as ever. These trends and developments indicate an evolving landscape ripe with opportunities and challenges.
For diamond companies, jewelry makers, and auction houses, adapting to these uncut diamond market changes and capitalizing on them will be the key to continued success.
At Choron, we remain committed to keeping a pulse on the entire diamond market’s heartbeat, ensuring we’re always a step ahead, catering to our clientele’s diverse needs and preferences in this ever-shifting diamond universe.