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13

01

D I AMOND I NDUSTRY

OUTLOOK

In contrast with precious metals and other natural resources industries,

which rely on multiple sources of demand, the diamond industry

derives practically all its value from consumers’ demand for diamond

jewellery. The outlook for the industry is thus intrinsically linked to the

strength of consumer desire for diamonds.

Positive demand growth for diamonds will almost

certainly outstrip growth in carat production in the

next 10 years, given the lack of major new discoveries

in the last decade and the projected production

slowdown in several existing mines. Even under

scenarios of volatile or weaker global economic

growth, demand for diamonds is expected to show

positive real growth in the next decade. Across the

value chain, companies that are able to innovate

and differentiate themselves will be best positioned

to capture the opportunities created by this supply

demand dynamic.

A positive supply demand outlook is shared by a

number of external experts. For example, in its

recent publication on the global diamond industry,

McKinsey & Company sets out four potential future

scenarios for the diamond industry

2

(see Fig. 1).

In every scenario, demand growth outstrips

production growth. De Beers has undertaken some

modelling of potential rough diamond supply and

demand based on McKinsey’s ‘Diamonds are Forever’

scenario, and the relative supply and demand curves

are shown in Fig. 2. Other industry analysts have

expressed similarly positive views (see Fig. 3).