The recently ended annual Botswana Resource Sector Conference, which was convened in the capital, Gaborone, saw several speakers making presentations on diamond mining and other mining sectors. Among the speakers was James Allan, the director of a corporate finance firm, Allan Hochreiter. In his presentation, Allan estimated that diamond prices will return to 2008 levels by end of 2010 owing to the global economic recovery and strong demand from emerging markets such as China and India. He also said that the two Asian countries will be major players in the diamond market in the next two decades. Rough & Polished’s Mathew Nyaungwa caught up with Allan on the sidelines of the conference to find out more on his presentation. Below are the excerpts.

Your presentation had a very catch title what exactly did you mean by Chindia decades?

Chindia is China and India, I believe those two countries are going to drive demand for diamonds in the next 20 years. There are massive populations in China and India. They have pretty strong economics.

The Gross Domestic Product (GDP) growth rate is also strong in both countries, and they also have big sections of their populations moving into ages of between 45 and 65, which is when the most of jewellery and diamond buying takes place in a person’s life.

You mentioned that even though China and India are set to drive the diamond market in the next 20 years, it is important not to underestimate the U.S. Why did you say so?

Oh, yes, never underestimate the Americans; they are a big component of diamond buying in the world. They buy about 50 percent of the world’s diamond jewellery at the moment and about 43 percent of the world’s diamonds by value. The Americans are also very affluent and the moment they start feeling a little bit better they will get their credit cards and start spending again.

In your presentation you also said that the Marange deposit, in Zimbabwe, was a bit of a wild card. Can you explain more on that?

Well it is a bit of a wild card because we do not know the extent of the deposit, we do not know how rich it is in terms of the potential for production. The diamonds are typically of a very low value, about 15 USD a carat at most and (production output) estimates I got are about 2 million carats per annum at the moment and that is slightly over 20 million USD per annum, which is not a large mine right now, but if proper systematic mining goes in there, who knows what it could grow to?

You projected that diamond supplies will decline in the next decade?

Yes, the reason for that is that some of the Canadian mines are getting into the end of the lives of their resources and the big mines of Jwaneng and Damtshaa in Botswana have to extend the lives of their open pits by decreasing production and extending their lives. Three of the big Russian mines are going underground and typically when a mine goes underground, the production halves in volume.

You seem to be a bit skeptical about De Beers’ adventure in Angola?

I think Angola is a very difficult place to do business in. I think they (De Beers) are going to find a large kimberlite there. It might take them another decade to do so or it might happen sooner but I believe they will take a long time to develop a mine there because it is heavily overlain by Kalahari sand and also I think the Angolan government does not have the same recipe for success of the mining industry that Botswana has.

Even though you mentioned that diamond supplies will deplete in the next decade, do you see any chances of a new discovery of a diamond resource?

There is always chances of a new discovery, never say no.

Mathew Nyaungwa, Rough&Polished, from Namibia