South Africa mining industry records lowest fatalities in 2022 – minister

The South African mining industry recorded 49 fatalities in 2022, which is the lowest-ever number of fatalities recorded in history, according to a senior government official. Mineral Resources Minister Gwede Mantashe told delegates at the Investing...

Today

African Mining Indaba begins

The annual Investing in African Mining Indaba, which is considered one of the continent’s largest gatherings of mining companies, investors and government representatives, commenced Monday in Cape Town, South Africa. The 2023 Mining Indaba theme is ‘Unlocking...

Today

Anglo American Platinum refined output down 25% in 2022

Anglo American Platinum’s production of refined platinum group metal (PGM) fell 25% in 2022 due to the delayed Polokwane smelter rebuild, and power outages, coupled with lower mine output and grades.

Today

Zim High Court orders release of Vast’s rough diamonds

The High Court of Zimbabwe has granted a default order against the minister of mines relating to the release of Vast Resources’ 129,400 carats of rough diamonds held in safe custody at the Reserve Bank of Zimbabwe.

Today

Gem Diamonds 2022 output dips on low ore treated

Gem Diamonds’ rough output at its 70%-owned Letšeng mine in Lesotho dropped 7% to 106 704 carats in 2022 compared to 115 335 carats produced in 2021.

Today

Why are rough diamond prices falling? Edahn Golan has the answer

26 december 2022
edahn_golan_xx.pngDiamond industry analyst Edahn Golan, owner of Edahn Golan Diamond Research and Data, says that rough diamond prices are falling mainly due to lower demand for polished diamonds.

He said the midstream sector of the diamond industry is now much more focused on buying the rough diamonds it needs and polishing what he thinks will be in demand.

Golan told Rough&Polished’s Mathew Nyaungwa in an exclusive interview that this is a remarkable process, fueled by a desire to cut spending, which was helped last year when money stopped being cheap, and the resulting decision to build inventories as much as possible to reduce.

Meanwhile, the diamond analyst said that the biggest challenge facing the natural diamond sector is getting consumers interested in natural diamonds for bridal use, not if consumers still want diamond-encrusted bridal jewelry.

Below are excerpts from the interview.

What is the current state of the rough diamond market?

Currently, the rough diamond market is going through its typical cyclical slowdown. Manufacturers are selective in their buying. As usual around this time of the year, manufacturers are mainly focusing on fulfilling demands coming in from the consumer centres where jewellery sales are reaching their annual peak. Once the holiday seasons end, manufacturers will assess consumer demand and decide how to proceed.

What is causing rough diamond prices to weaken?

Mainly a decline in demand for polished diamonds.

In recent years, the diamond industry midstream became more efficient at managing its inventory and finances. Today is far more focused on buying the rough diamonds that it needs, polishing what it expects will be in demand, rarely providing goods on the memo, and lowering prices of polished to secure a sale.

This is a remarkable process, driven by a desire to reduce expenses, supported in the past year when the money stopped being cheap, and the resulting decision to reduce inventories as much as possible. With that comes an increasing concern over the global economic outlook. One of the most intriguing parts of this is the growing understanding of the need to know what the real demands in the market are. From that perspective, rough diamond prices are not weakening as much as they are being adjusted by market realities to reflect consumer purchases.

What is your projection of diamond prices in the first half of 2023?

In 2021, prices and demands were exceptionally high, something that stretched into 2022. Then a decline hit the consumer market in the second half of 2022. The level of demand in December will dictate prices in the first couple of months of 2023.

After that, it will be the combination of consumer demand, availability of rough, and cost of money. Considering this, and current market trends as we see at retailers across the market, it will be fair to expect a decline in polished diamond prices, especially if rough diamond prices will continue softening.

What will drive prices up/down in the first half of 2023?

Consumer demand. We are in a demand-driven market and I don't identify what will change near term.

How are rough diamond producers marketing their stones in the face of growing lab-grown diamonds?

There are several models. One is De Beers', which invests heavily in consumer demand. They do it through a series of initiatives, plus through NDC.

The mid-size companies are primarily supporting NDC, which remains the primary effort the diamond industry is putting forward. Then there is the HB model, through which Lucara is selling its larger items. That is an interesting model. Fundamentally, HB is counting on a change in the way consumers will buy diamonds. That provenance – and by extension energy use, ethical conduct, and governance – will be the primary considerations before diamond consumers make a purchase. The logic for natural diamonds is that if addressed well, the consumer will be willing to pay a premium for a natural product and prefer it.

What is the most searched between natural and lab-grown diamond jewellery?

It's hard to understand that from Google Trends. From looking at what is selling at stores, there is a clear growth in the share of sales of LG and LG-set jewellery. For example, if you look at just loose diamond sales by American jewellery stores, you will see that LG accounted for 12% of units sold in January 2020, and grew to 20% by January 2021. In November, that figure already stood at a 40% share of units sold. Four out of every ten diamonds sold were lab-grown.

You once noted that people are looking less for diamond engagement rings due to the end of the ‘Diamonds are Forever’ ad campaign by De Beers. Is this still the case or has it changed? If the latter, what is driving the change?

The “a diamond is forever” campaign was a momentous success. Without a constant, ongoing campaign, it’s difficult to sell a product. In the past few years, we are seeing several initiatives. Many of them aimed at driving diamond jewellery demand for bridal. The important measure is what is happening at stores, and there we see the American public is still very much in love with diamonds. Rather consistently, about 85.5% of engagement rings are set with diamonds. This fluctuates a little, but not much.

The second and third most popular options for a gem-set engagement ring are sapphires and emeralds, accounting for about 1% each.

But surprisingly, the second most popular option is an engagement ring not set with any gem. That is about 8.5% of sales.

I think the biggest challenge for the natural diamond sector is not if consumers will continue wanting bridal jewellery set with diamonds. The challenge is to keep consumers interested in having natural diamonds set in bridal. That is probably the biggest and most important challenge it is facing today.

Mathew Nyaungwa, Editor in Chief of the African Bureau, Rough&Polished