admin
A DE BEERS latest Diamond Insight Report 2014 has revealed that global rough diamond production is on the decline from a peak of 175-million carats in 2005 to 145-million carats in 2013.
Global demand for diamond jewellery reached a record high of $79 billion in 2013 and is expected to continue to grow over the long term, driven by ongoing economic recovery in the US, as well as the growth of the middle classes in developing markets, such as China and India, says the report.
It also states that the forecast reduction in supply from existing sources is not likely to be matched by new production coming on stream in the years ahead.
While recovery is expected to continue for the next four years, which will facilitate a more balanced market, there is growing consensus among analysts and industry stakeholders that a new spectre — that of waning production — now looms on the horizon and threatens to disrupt that recently restored balance by the close of the decade.
The report says diamond supply is expected to plateau in the second half of the decade before it is expected to decline from 2020.
Speaking at the Kimberley Diamond Symposium 2014 last month, Tsodilo Resources president and CEO Michiel de Wit said while there were several new projects set to come into production over the next few years — in Russia, Siberia, Canada and Southern Africa, they were small and will only add some 17-million carats a year to global production.
“Cumulatively, these project will not have a major effect on the steady decline on production of rough (diamonds), and the downward trend is forecast to accelerate over the next few years,” warned de Wit.
He said the widening gap between supply and demand was a reality, which “will not do the diamond industry any good, as it will open a feed for synthetics and recycling”.
The looming production crisis has been attributed to the low discovery rate of economically viable kimberlite since the turn of the century.
De Wit says even new projects coming into production consist of kimberlites that were found decades ago.
Since the discovery of the first diamondiferous kimberlite pipes in the Nothern Cape in the 1870s, more than 8,000 kimberlites and lamproites have been discovered worldwide, 43 percent of which are directly attributable to De Beers’ exploration efforts over the past five decades.
However, this significant number belies the difficulties associated with diamond prospecting, as only 15 percent of kimberlites have proven to be diamondiferous. More astonishing is that, of that vast number of discoveries, only 67 deposits have had a resource sufficient to justify the economics of establishing a mine with sustainable production, while only seven deposits are classed as Tier 1 deposits and account for 62 percent of rough production.
According to the Diamond Insight Report, the industry has spent almost $7 billion since 2000, with only meagre results to show for its efforts.
De Beers exploration head Charles Skinner believes the decline in the diamond discovery rate is attributable to a decrease in exploration effectiveness over the last two decades, exacerbated by the fact that key prospective areas lie in countries that are deemed a political risk.
Key factors contributing to the decline in appetite include: the difficulty of retaining expertise, particularly operational competencies and in-house knowledge and science; rising costs, which results in longer lead times and less perseverance; and increasing prerequisite regulatory compliance and best practice.
With diamond exploration proving less successful, are there any other large economically viable kimberlite deposits left to discover? And will there be an upswing in prospecting activities in the near future, particularly in light of a looming production crisis?
However, there is a general consensus among geologists that there are parts of the globe that are still highly prospective and could yield large kimberlite discoveries.
Among these places are countries such as South Africa, Botswana, Angola, Zimbabwe and Lesotho who are seen as having potential to steer growth. – Miningweekly.
Online Reporter