India, China to Propel Surge in Global Diamond Demand

Researched by Industrial Info Resources Australia (Perth, Australia)--Diamond mining companies are predicting a new era of demand and stronger prices within the next 10 years, as a growing appetite for the precious stones in China and India combines with steady U.S. imports. Even the most conservative growth scenario forecasts a strong positive outlook for the $60 billion diamond jewellery industry.

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Demand is expected to grow by more than 6% per year for the next few years, but there have been no recent major global discoveries. There is little indication that the supply situation will change, since it takes more than 10 years to take a project from discovery to production.

Among the companies with this outlook are Rio Tinto (NYSE:RIO), De Beers (Luxembourg, Luxembourg), Anglo American plc (London, England) and Alrosa (Mirny, Russia).

The increase in demand would create a structural shortage for the industry and signal a huge increase in prices, particularly for larger diamonds. An expanding middle class in China and India will almost double the global demand for diamonds before the end of the decade, according to forecasts. Driving much of the demand surge, their combined market share is projected to reach more than 30% by 2020, up almost half from its current level and nearly equal to the share of the U.S. market.

Zimbabwe, Botswana and the Democratic Republic of Congo, together with Russia, account for more than 84% of global diamond production of 130 million carats, according to estimates. Australia's combined diamond production capacity of more than 16 million carats, extracted from the massive Argyle Mine and the smaller Merlin and Ellendale mines, will ensure that it remains an important contributor to the global diamond supply in coming years--although not as large a supplier as it once was, before the deterioration of the Argyle Mines.

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