Globally Diamond Production
Global diamond production increased by 11.9% to 120 million carats in 2021. Often, an increase in production indicates an increase in employment in the diamond industry. However, last year’s production was lower than that of 2019, and it was one of the lowest production levels in more than a decade.
According to the latest Kimberley Process (KP) data, the total value of exports from diamond producing countries is $13.99 billion. KP followed production from 22 countries, compared to 24 in 2020 and 2019.
Excluding diamond production in 2020, last year’s production volume was the lowest since 2009. In contrast, the total cost of production is high, as the price for rough diamonds has risen last year, and the average value of global diamond production hit a record high of $116.53 per year .
Meanwhile, production in Botswana is the most affected by the epidemic, registering a significant reduction of 28.5% to 16.9 Mct in 2020. This reduction is due to the continued decline in response to low demand for rough diamonds caused by COVID-19 and operational challenges at Debswana’s Orapa mine, which resulted in lower than expected production. Going forward, due to the resumption of mining activities and signs of recovery, the country’s rough diamond production is expected to resume, increasing by 37%, to 23.2 Mct and 2021, before decreasing by 2.2% in 2022, associated with the closure of the Damtshaa mine (2022), and stabilized during the rest of the forecast. Meanwhile, Debswana Diamond, a producer in Botswana, plans to return production to pre-COVID levels between 2021 and 2023.
Overall, production during the forecast period (2021-2025) is expected to grow at a CAGR of 2.5%, reaching 124.8 Mct in 2025. Russia, which holds some of the largest reserves the amount of diamonds in the world, is expected to remain the largest. supply to the world. . With possible new diamond mines, Botswana, Canada and the Democratic Republic of Congo (DRC) are also expected to become strong suppliers of diamonds to the world market. Furthermore, Angola will emerge among the top five producers in the world and eventually overtake the DRC to become the fourth largest by the end of the forecast period.
Production in Australia will continue to decline, due to the depletion of ore reserves at the Argyle mine, which began in 1983 and will cease production in November 2020. With the Ellendale mine currently inactive, diamond trading in ‘Australia finished well in the end. of 2020.
However, the Australian diamond industry can be revived due to the emergence of several mining companies that are currently conducting various exploration projects to finance diamond deposits. In addition, as of May 24, 2021, Lucapa Diamond entered into an agreement to acquire the Merlin Mine from Merlin diamonds, providing some hope to revive the Australian diamond industry following the closure of Argyle. In addition, to attract investment in diamond mining, the Northern Territory Government reduced the royalty rate on precious stones to 5% in July 2020, a reduction of 2.5% from the previous rate of 7.5%.
Diamond Production in India
India is the largest diamond cutting and polishing center in the world, accounting for over 90% of the world’s polished diamond production. This is said to include factors such as easy access to skilled labor, high technology and low cost. It contributed about 19% of the total global diamond exports in 2019 and was the largest exporter of polished gold in the world, according to the ITC trade chart (SH group: working diamonds and it is inactive).
Even before the outbreak of COVID-19, however, the Indian diamond industry was facing a downturn and was moving slowly due to domestic and international issues. These include an increase in import duties and precious stones. Polished diamonds and colored stones, lending system through banks, strict customs inspection system, large imports and removal of GSP benefits from USA, etc.
According to GJEPC statistics, India’s polished diamond export volume began to stumble long before the announcement of the lockdown in the country, down 19.38% annually. Export share for major destinations such as the United States (-16.25%), Hong Kong (-32.06%), Belgium (-15.54%), etc. decreased significantly in FY 2019-20 as compared to FY 2018-19.
India’s diamond industry in the COVID-19 blues
The COVID-19 pandemic has taken a toll on all aspects of individual life worldwide and business activities in the gemstone and jewelry sector are no exception. The global supply chain has been severely disrupted due to country shutdowns in various parts of the world, demand side restrictions, excess freight, reduction in luxury purchases and lack of human resources, etc. These feelings reached India.
All the actors involved in the Indian diamond industry including miners, producers, traders, dealers have been affected, especially industrial workers n ‘in the countryside. These workers have no other choice but to move to their villages without any stable source of income due to the closure of factories and the threat of the COVID-19 pandemic during the first wave of COVID-19.
India’s total exports of “cut and polished diamonds” fell from US$ 18.66 billion to US$ 16.4 billion in FY 2020-21, registering a 12-year decline of .13% (GJEPC, 2021 ). Exports of uncut and polished diamonds fell sharply by about 47% year-on-year from April to July 2020 as customs and other services were closed due to a complete lockdown in the country. India’s diamond industry is well-known as two of the most important diamond cutting and clearing areas, namely Surat and Mumbai, saw a sharp increase in COVID cases during the first and second phase of the pandemic. . In addition, target markets – the most important export destinations, namely Hong Kong (-64.10%), Turkey (-94.57%) and Japan (18.02%), the United States (6.35%), etc. because Indian exports are also heavily affected. due to the coronavirus, resulting in low imports from India.