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F I G . 1 :
FOUR FUTURE SCENAR I OS FOR THE D I AMOND I NDUSTRY
1
DIAMONDS
ARE FOREVER
Consumer demand grows strongly, fuelled by recovery in the US economy and continued above-
average growth in emerging markets, especially China and India. Brands become more important and
increasingly invest in promoting the allure of diamonds. Even with demand in Europe and Japan
softening, the dynamics of supply and demand in this scenario mean that previously uneconomical
mining projects become economically viable, so production is maximised.
2
DEMAND
SHOCK
Diamond demand grows more slowly as key consumer markets such as the US, China and India
experience weak growth. Companies lose the incentive to invest heavily in brands, and diamonds lose
some appeal through a lack of investment in promoting the diamond category and consumers moving
away from conspicuous consumption. Production remains stagnant but recycling of diamond jewellery
increases as consumers encounter financial distress.
3
FEAST AND
FAMINE
The diamond industry develops in a volatile manner, driven by high levels of global macro-economic
uncertainty. Strong rises in demand are followed by sharp decreases, leading to scattered supply
expansion. Lead-time between the demand and supply cycles implies a wide variation in prices.
Mining companies strive to diversify their mining assets to manage volatility and adapt to the growing
resource nationalism trend. Consumers increasingly move away from diamonds, and brands slow down
their investments.
4
EAST RENEWS
GLOBAL
GROWTH
The industry enjoys strong growth driven by emerging markets, especially China and India. However,
US growth is only moderate. The consumer base for diamonds widens as the emerging middle class
grows and consumers show a distinct preference for brands. Diamond producers will continue to invest
in developing new supply projects.
McKinsey recently published a report,
'Perspectives on the Diamond Industry'.
Building on four key uncertainties, the macro-
economic outlook, future consolidation in the value chain, consumer attitudes to diamonds, and the supply of rough
diamonds, the report identified four future scenarios for the global diamond industry.
Source: McKinsey & Company,
‘Perspectives on the Diamond Industry’,
September 2014
Source: De Beers analysis, McKinsey & Company,
‘Perspectives on the Diamond Industry’,
September 2014
F I G . 2 :
SUPPLY AND DEMAND CURVE BASED ON ‘ D I AMONDS ARE FOREVER ’
SCENAR I O
Demand forecast value in nominal terms (smoothed)
Production forecast in value at 2013 prices
2025F
2024F
2023F
2022F
2021F
2020F
2019F
2018F
2017F
2016F
2015F
2014F
60
80
100
120
140
160
180
Index base 100 in 2014