Supply woes herald good times for the world’s diamond miners

LONDON – Diamond miners are looking forward to a long spell of bumper profits as demand grows in newly prosperous Asian nations and polishing firms scramble to secure dwindling supplies, analysts say.

Despite mining few extra gems last year, the value of rough, or uncut diamond production rose over US$1 billion (N$6,7 billion) to some US$10,2 billion on some estimates, thanks to a price jump of up to 20 per cent. The market, at least from the miner’s perspective, is dazzling.”If we weren’t in the diamond business we would be trying to figure out how to get into it …We like this business probably more than most of the minerals we’re involved in,” said Marcus Randolph, head of diamonds at the world’s biggest diversified miner BHP Billiton Figures from De Beers, which produces more than 40 per cent of the world’s rough diamonds by value, show sales to the United States rose eight per cent last year and were up three per cent in Japan — a market that had been stuck in the doldrums for a decade.China, India and Turkey all recorded double-digit percentage growth in 2004, say South-African based De Beers, whose advertising campaigns are helping to spark consumers’ interest in diamonds across the fast-growing economies of Asia.In Beijing for example, 80 per cent of grooms now buy their brides diamond engagement rings, say De Beers, in a country with no traditional connection between diamonds and weddings.Another De Beers’ campaign, “Trilogy,” promotes three-stone jewellery where one stone used to be the norm.Despite exciting emerging markets, diamond miners are not sitting back and waiting for the money to roll in.Since a series of discoveries in Canada in the early 1990s few fresh diamond deposits of any significance have been unearthed.”There’s not been a world-class diamond mine discovered for at least 10 years,” says Keith Johnson, head of diamonds at the world’s second biggest miner Rio Tinto The fact that miners have failed to find exciting new kimberlites – the pipes of volcanic rock in which diamonds originate – is not for want of trying.Rio spent around 25 per cent of its exploration budget last year looking for the gems, and this at a time when some of its businesses like coal and copper are enjoying record prices.A number of big and small diamond players are now hunting for diamonds in less politically stable countries such Angola, Sierra Leone and the Democratic Republic of Congo to close a gap in supply that analyst James Picton at London brokers WH Ireland says is likely to deteriorate.While production at De Beers’ mines in Botswana – the largest in the world – continues unabated, its new pits planned for Canada will be modest in world terms, says Picton.Elsewhere, output at Ekati, BHP’s mine in Canada, has tumbled 38 per cent in 2004/05, its best days behind it, and the world’s biggest source of small diamonds – Rio’s Argyle mine in Western Australia – may close altogether.Industry advisers WWW International Diamond Consultants estimate that by 2012 the gap between supply and demand will be worth up to US$4 billion at today’s prices.-Nampa-ReutersThe market, at least from the miner’s perspective, is dazzling.”If we weren’t in the diamond business we would be trying to figure out how to get into it …We like this business probably more than most of the minerals we’re involved in,” said Marcus Randolph, head of diamonds at the world’s biggest diversified miner BHP Billiton Figures from De Beers, which produces more than 40 per cent of the world’s rough diamonds by value, show sales to the United States rose eight per cent last year and were up three per cent in Japan — a market that had been stuck in the doldrums for a decade.China, India and Turkey all recorded double-digit percentage growth in 2004, say South-African based De Beers, whose advertising campaigns are helping to spark consumers’ interest in diamonds across the fast-growing economies of Asia.In Beijing for example, 80 per cent of grooms now buy their brides diamond engagement rings, say De Beers, in a country with no traditional connection between diamonds and weddings.Another De Beers’ campaign, “Trilogy,” promotes three-stone jewellery where one stone used to be the norm.Despite exciting emerging markets, diamond miners are not sitting back and waiting for the money to roll in.Since a series of discoveries in Canada in the early 1990s few fresh diamond deposits of any significance have been unearthed.”There’s not been a world-class diamond mine discovered for at least 10 years,” says Keith Johnson, head of diamonds at the world’s second biggest miner Rio Tinto The fact that miners have failed to find exciting new kimberlites – the pipes of volcanic rock in which diamonds originate – is not for want of trying.Rio spent around 25 per cent of its exploration budget last year looking for the gems, and this at a time when some of its businesses like coal and copper are enjoying record prices.A number of big and small diamond players are now hunting for diamonds in less politically stable countries such Angola, Sierra Leone and the Democratic Republic of Congo to close a gap in supply that analyst James Picton at London brokers WH Ireland says is likely to deteriorate.While production at De Beers’ mines in Botswana – the largest in the world – continues unabated, its new pits planned for Canada will be modest in world terms, says Picton.Elsewhere, output at Ekati, BHP’s mine in Canada, has tumbled 38 per cent in 2004/05, its best days behind it, and the world’s biggest source of small diamonds – Rio’s Argyle mine in Western Australia – may close altogether.Industry advisers WWW International Diamond Consultants estimate that by 2012 the gap between supply and demand will be worth up to US$4 billion at today’s prices.-Nampa-Reuters