By: Kim Cloete

CAPE TOWN (miningweekly.com) – The demand for diamonds is set to continue increasing this year, with demand outstripping supply and no new discoveries on the horizon, delegates at the Mining Indaba heard this week.

“There’s no significant rise in production and that will affect diamond pricing,” said Fusion Alternatives CEO Adam Schulman.

He noted that the diamond industry had been in transition over the last decade, shifting from a supply-controlled to a demand-driven industry, with no new world-class discovery having been made in the past decade.

Schulman said demand growth had exceeded production growth and stockpiles had diminished to minimum working levels.

“Short-term rough diamond price instability over the next six months will be caused by liquidity constraints within the diamond pipeline. This could present an opportunity for savvy investors,” he added.

Global demand for diamond jewellery had trended upwards since 2009, with strong demand in China, India, the Gulf and Turkey.

A boost in Internet sales of diamonds had also given the industry a new shine, with a steady increase in demand for global retail diamond jewellery. Schulman expected supply to be steady over the next few years.

Schulman, whose company specialised in diamond tenders, said the tender system was having an effect on the markets by giving noncore producers the opportunity to reach markets they were not able to before.

He added that the diamond market was very solid, with standardised acceptable pricing mechanisms becoming a lot more sophisticated and transparent.

The long-established trade of polished diamonds in centres like Mumbai, Amsterdam and New York had been supplemented by growth over the past decade in secondary “screen markets”.

An interesting and growing development had been the boost in recycling of jewellery, which was popular in India and the US.