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Rough diamond sales declined in 2015 with some producers reacting to weakened demand by reducing production over 2014 levels. However, investments made in the past 10 years should see production increase in the short to medium term before stabilising.

ROUGH DIAMOND SALES

Global rough diamond sales to cutting centres fell by some 30 per cent between 2014 and 2015, to an estimated US$13.7 billion. De Beers remained the largest supplier of rough diamonds by value, albeit with a reduced share of sales of 31 per cent (from 35 per cent in 2014). This includes the approximately two per cent of global rough diamond sales made by Diamond Trading Company Botswana (a joint venture between De Beers and the Government of the Republic of Botswana) to Okavango Diamond Company, the Government’s diamond trading company.

ALROSA was the second-largest supplier of rough diamonds, with 25 per cent market share by value (compared with 26 per cent in 2014). Other major suppliers were SODIAM (which sells Angola’s total rough diamond output) with an eight per cent share (2014: seven per cent), Rio Tinto, with a five per cent share (as in 2014), Dominion Diamond Corporation, also with an unchanged five per cent share and Petra Diamonds with three per cent (the same as 2014) (Fig. 14).

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MORE ROUGH DIAMONDS ARE BEING SOLD LOCALLY

The trend toward more in-country beneficiation continued during the past year, with the signing of a milestone, 10-year agreement between the Government of the Republic of Namibia and De Beers for the sorting, valuing and sales of production from Namdeb Holdings.

This deal will see Namibia benefit from more rough diamonds being made available for domestic beneficiation, with US$430 million of rough diamonds being offered annually to Namibia Diamond Trading Company customers. All Namdeb Holdings’ special stones will be made available for sale in Namibia.

In addition, 15 per cent of Namdeb Holdings’ run-of-mine production will be made available for sale by an independent, government-owned sales company called Namib Desert Diamonds Pty Ltd.

Rough diamond producers have continued to support local beneficiation. In South Africa, for example, De Beers launched the Enterprise Development Project for Diamond Beneficiators, which aims to help grow and transform the diamond cutting and polishing sector. The programme also sees De Beers offer rough diamond assortments to participants while they are part of the development scheme. On completion, they may be able to apply to become Accredited Buyers of De Beers before ultimately being able to apply for Sightholder status, enabling them to compete with leading diamond companies around the world.

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ROUGH DIAMOND PRODUCTION

De Beers estimates total global rough diamond production was worth US$17.5 billion in 2015, 10 per cent lower than in 2014 (Fig. 15). However, in carat terms, global rough diamond production declined by less than one per cent to 141 million carats.

The largest-producing countries in volume terms were Russia with a 29 per cent share (which compares with 27 per cent in 2014); the Democratic Republic of Congo with 17 per cent (19 per cent in 2014); Botswana with 15 per cent (18 per cent in 2014); Australia with 10 per cent (seven per cent in 2014), and Canada with nine per cent (unchanged since 2014).

Russia also remained the largest producing country in value terms, with a 29 per cent share of the total value produced in 2015 (slightly above the 26 per cent it had in 2014). Botswana was the second-largest producer in terms of value, with 21 per cent (in 2014 it was 23 per cent), followed by Canada, with 10 per cent (12 per cent in 2014). Angola, with an unchanged nine per cent, and South Africa with seven per cent, also the same share as in 2014, completed the list of top producing countries by value.

De Beers and ALROSA were again the two largest-producing groups in both volume and value terms. De Beers’ share of production volume was 20 per cent in 2015 (down from 23 per cent in 2014), second to ALROSA, which had 27 per cent (up from 26 per cent in 2014).

Rio Tinto was the third-biggest producer by volume, with a 12 per cent share (10 per cent in 2014) followed by Catoca with five per cent (the same as in 2014); and Dominion Diamond Corporation with four per cent, also unchanged from 2014.

In value terms, De Beers remained the largest producer with a 32 per cent share of value in 2015, compared with 34 per cent the previous year. ALROSA was the second-largest with 28 per cent, up from 25 per cent in 2014. Catoca was the third-biggest producer by value with a five per cent share (unchanged from 2014) followed by Dominion Diamond Corporation, also with five per cent (no change from 2014) and Rio Tinto with four per cent (also unchanged from 2014) (Fig. 16).

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LOOKING AHEAD

2016 sees two new diamond producers commence production: Mountain Province Diamonds with the Gahcho Kué mine, in partnership with De Beers, in the Northwest Territories of Canada, and Stornoway Diamonds with the Renard mine in Quebec, Canada.

De Beers announced the commissioning of the Gahcho Kué plant in August 2016. The mine is expected to produce an average of 4.5 million carats per year once fully operational. Renard began production in the third quarter of 2016; annual production is expected to average 1.6 million carats. These two projects are expected to contribute to an increase in rough diamond production in the medium term.

However, beyond the three new mines in 2016 (Gahcho Kué, Renard and Liqhobong Main Treatment Plant), the greenfield pipeline is limited (Fig. 17).

Despite a sparse greenfield project pipeline, there are a number of brownfield expansion projects under construction, with production set to start in the medium term. Dominion Diamond Corporation announced earlier this year that it will proceed with the development of the Sable and Jay pipes at the Ekati mine in Canada, extending the life of production at the mine until 2033. Rio Tinto and Dominion Diamond Corporation are developing the A-21 pipe at Diavik, also in Canada, which is expected to begin producing in 2018 and extend production life at the mine to 2023.

De Beers is also extending the life of some of its major assets. The Cut-8 project at the Jwaneng mine in Botswana will begin producing diamonds in 2017, while the development of the Venetia underground project in South Africa is expected to extend production life at that mine beyond 2040.


17 Okavango Diamond Company sales are accounted for in the De Beers market share estimate as sale from Diamond Trading Company Botswana.
18 SODIAM sales from Angola Ministry of Geology and Mining.
19 Informal sector sales are De Beers estimates. De Beers has lower confidence in estimates of informal production than other sources. Informal sales values are measured at De Beers’ Standard Selling Value.
20 Other sales are from company reports, including Gem Diamonds, Lucara Diamond Corp, Kimberley Diamonds, Lukoil, Rockwell Diamonds, Trans Hex and estimates for other smaller producers.