Diamonds (Global Market)

Diamonds (Russian market)

• Diamonds (Russian market)

Market size

2019: Sales cut by 20% from $15bn to $12bn

The global diamond market, according to the international rating agency Moody's, fell in 2019 by 20% to $12 billion, compared with $15 billion in 2018.

Diamond mining

2023

For the second year in a row, Russia accounted for more than a third of the world's diamond production

In early July 2024, data were published confirming Russia's leading position in the world diamond market. According to Kimberley Process statistics, in 2023, the country accounted for 33.5% of the total diamond production in the world, which amounted to 37.3 million carats. This is the second year in a row that Russia has held more than a third of the world's gemstone production.

According to RIA Novosti"," Russia not only retained leadership in terms of production, but for the first time since 2019 overtook Botswana in terms of the cost of the diamonds received. Despite the global downward trend, the Russian diamond mining industry showed an increase in the cost of mined stones by 1.5%, reaching 3.6 billion. dollars

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The global diamond market in 2023 was characterized by a general decline. The volume of production decreased by 8%, amounting to 111.5 million carats, and the total cost of mined stones decreased by 20%, to $12.7 billion. This result was the second worst in history after 2020, when 107.3 million carats were mined.

Against the background of a general decline in indicators, Russia was the only one among the largest producers that managed to increase the cost of mined diamonds, despite a decrease in physical production by 11%.

Botswana, the second largest producer of diamonds, increased its output by 2.4%, reaching 25.1 million carats. However, the cost of mined stones in this country fell by 30%, amounting to $3.3 billion. Canada retained third place with a production volume of 16 million carats, but the cost of its products decreased by 17.5%, to $1.55 billion.

Angola climbed to fourth place, increasing production by 11.3%, to 9.75 million carats. However, the cost of mined diamonds in this country decreased by 22%, to $1.5 billion. The Democratic Republic of Congo ranked fifth, reducing production by 23% to 8.35 million carats, and the cost of production fell by 15% to $65 million.

South Africa reduced diamond production by 39%, to 5.9 million carats, and Zimbabwe - by 10%, to 4.9 million carats. The value of mined diamonds in South Africa decreased by 48%, to $794 million, and in Zimbabwe - by 28%, to $303.2 million.^[1]

Plan of Western countries to introduce a ban on the purchase of diamonds from Russia

After the outbreak of the conflict in Ukraine, dealers in Antwerp (Belgium) were asked to boycott Russian stones. By November 2023, Western countries want to give the boycott an official character by introducing an official ban on Russian stones. The G7 announcement is expected for several weeks, but disagreements over details drag on the process - Reuters.

2022: Russia for the first time occupied 35% of the global market or 41.9 million carats

According to the results of 2022, Russia for the first time occupied 35% of the global diamond production market. Prior to that, the country occupied from 22% to 33% of the market in this area for many years. Over the year, 119.96 million carats were produced in the world, of which 41.9 million were in Russia.

2021: Pandora ditches natural diamonds

On May 4, 2021, Pandora announced that the company was completely abandoning natural diamonds. Instead, it is planned to use only those products that were grown in laboratory conditions. Read more here.

2014: Russia No. 1 by the value of diamonds produced

At the end of 2014, Russia outstripped Botswana in the total value of diamonds produced and came out on the 1st place in the world, follows from the statistics of the Kimberley Association of Diamond Producing Countries and Diamond Importers.

At the same time, at an average price per carat, Botswana is still in the lead. Russia, which traditionally was inferior to Botswana in terms of the price of mined diamonds, although it was ahead in terms of volumes, in 2014 took a leading position in both categories.

The estimate of the value of the produced diamonds of the Russian Federation increased in 2014 by 20% to $3.73 billion, the average price per carat - by 19% to $97.47. This data was reported back in February 2015 by the Ministry of Finance of the Russian Federation^[2].

In total, 38.303 million carats of diamonds were produced in Russia in 2014 (an increase of 1% compared to 2013). Of these, ALROSA, which accounts for about 25% of the world and up to 90% of Russian production, produced 36.2 million carats of diamonds, Interfax reports. In addition to ALROSA, diamonds in the Russian Federation are mined by Grib Diamonds (100% subsidiary of NK LUKoil), which is developing a tube named after Mushroom in the Arkhangelsk region.

The estimate of the value of Russian diamonds used by the Ministry of Finance is closer to the insurance value, which is significantly lower than real market prices (however, the figures allow us to conclude about the dynamics of prices in the market and the quality of diamond raw materials).

The assessment methodology for each member country of the association may differ, since there is no single price list.

The estimate of diamonds produced in Botswana in 2014 is $3.65 billion, which is at the level of 2013, Rapaport reported.

The average price is $147.84 per carat, which is 5% lower in annual terms, which is due to the fact that with the unchanged estimate, diamond output increased by 6% to 23.187 million carats. The main diamond producer in Botswana is Debswana, which is owned on a parity basis by De Beers and the government of that country.

The third place in the world in terms of the value of diamonds in 2014 was occupied by Canada, the gemstones mined in the territory of which are estimated at $2 billion (an increase of 5% in annual terms). Output rose 13% to 12.011 million carats. The average price, on the contrary, decreased by 7% to $166.78/carat.

Angola in 2014 produced $1.32 billion worth of diamonds (up 13%). Production increased by 2% to 8.791 million carats. Closes the top five of South Africa, mined in which 7.43 million carats of diamonds were estimated at $1.22 billion (an increase of 3%). Other major producers are Zimbabwe (4.771 million carats, cost - $238.6 million) and Namibia (1.917 million carats, cost - $1.16 billion).

The most expensive diamonds are produced in Lesotho. The average diamond price of this African country in 2014 increased by 69%, amounting to $990.18 per carat. Namibia is in second place ($602.57 per carat), but its raw materials fell by 25% in 2014.

World diamond production fell by 4% in 2014 to 124.778 million carats, in monetary terms - increased by 4% to $14.5 billion. The average price per carat increased by 8%, amounting to $116.17 per carat.

The total export of diamonds by the member countries of the association grew by 6%, amounting to $58.12 billion. Total imports also increased - by 5% to $56.63 billion.

The largest importer was India, the main center for diamond production. Imports to India increased by 8% in monetary terms, amounting to $17.21 billion, while falling by 4% in carats (to 153.609 million carats). The main exporter is the EU (including Belgium), which exported 116.017 million carats, estimated at $15.71 billion (a drop of 10%).

2011: Russia No. 1 in terms of diamond production

World diamond production in 2011 amounted to almost 124 million carats (in 2010 - 128 million carats). The value of mined diamonds increased by 26 percent compared to 2010 to $14.406 billion.

Russia took first place in the list of diamond mining countries in terms of production in 2011. This is reported in the materials of the Kimberley Process - the community that controls the world turnover of diamonds.

In 2011, the following was mined:

• Russia - 35.14 million carats,
• Botswana - 22.9 million,
• Democratic Republic of Congo - 19.249 million
• Canada - 10.795 million carats,
• Zimbabwe - 8.502 million carats and
• Angola - 8.328 million carats.

In value terms, the leaders in the extraction of precious stones were:

• Botswana - $3.902 billion (the value of one carat mined in this country is $170),
• Russia - $2.675 billion ($76),
• Canada - $2.551 billion ($236),
• Democratic Republic of the Congo ($9).

The most expensive diamonds are mined in Lesotho - 1.6 thousand dollars per carat^[3].

Diamond exchanges

Most diamonds (about 65%) are mined in Africa, in particular in Angola, Botswana, the Democratic Republic of the Congo, Namibia. Also, these precious stones are found in significant volumes in Russia, Australia, Canada. After mining, diamonds go for sorting, processing and sale. Most of the stones are sold through a network of diamond exchanges, the number of which is 29 as of March 2014.

Antwerp

Antwerp is considered the largest center of diamond trade in March 2014, where most of the world's transactions are made. An ignorant passerby who wanted to buy jewelry is unlikely to pay attention to four buildings along Hovenierstraat Street. Unless the audience in this place gathers special: mainly Jews, Russians, Indians, Chinese. In general, about eight thousand people are employed in the diamond trade here, who occupy 1.5 thousand offices and make transactions worth $140 million every day.

In the diamond market, where the leading role has been held by representatives of the Jewish nation for several centuries, a handshake and the already mentioned wish "Mazal Ubrakha" are enough to conclude a deal. The minimum documentation hints at the closure of the market. Indeed, it is almost impossible to get into this $50 billion-plus-a-year business from the street.

Even if you go to a meeting with a familiar trader to be held in the building of the Antwerpsche Diamantkring diamond exchange, you will be examined no worse than at the G20 summit. At the entrance, you need to provide not only a passport - in addition to this, you will take a fingerprint of your right index finger. The data may seem suspicious to the guard, and the police in such cases arrive quickly.

Precautions are not excessive at all. In recent decades, attackers have managed to steal more than $160 million worth of diamonds from Antwerp traders. There are tragic cases in the history of the gemstone trade. In October 1981, a car filled with explosives exploded near the synagogue on Hovenirstrat. Three people were killed in the attack. According to investigators, the terrorists were targeted by representatives of the Jewish community involved in the diamond trade.

Panama

In mid-March 2014, the first diamond exchange in South America was launched in Panama. Despite the region's remoteness from Antwerp - a traditional gem trading hub - the site will operate under the same rules: deals will be anchored by the traditional Jewish wish "Mazal ubraha," meaning "good luck and blessings." The exchange is expected to allow trading in the region, which is considered the most undeveloped diamond market in the world.

According to the initiators of the opening of the exchange in Panama, it will allow the South American market to grow from the current eight billion to ten billion dollars by 2017. The lack of a trading platform forced local dealers to travel for goods to the United States and Europe on their own, which inevitably affected the final cost for the consumer^[4]

In Latin America, there are almost 12 thousand jewelry stores, 750 wholesalers and 320 mining companies. Diamonds on the Panama exchange will come from major shopping malls such as New York, Antwerp, Tel Aviv, Dubai, Hong Kong and Mumbai.

Blood Diamonds (Kimberly Process Certification)

When discussing precious stones, one cannot but recall the "blood diamonds" that are mined in territories where hostilities are conducted. The funds received from the sale of such diamonds are usually used to finance wars. Stones that were mined during the civil wars in Sierra Leone, Angola, Kot-d, Liberia, Congo, Zimbabwe were called "bloody." Warlords were willing to sell diamonds virtually on the street, and much cheaper than official companies. Many dealers were attracted by the low price. They turned a blind eye to the origin of the stones, thus contributing to the spread of wars in Africa.

The attention of the whole world was attracted to this problem only in the late 90s. In the early 2000s, a resolution was adopted in Antwerp. Its goal was to counter the sale of diamonds from war zones. As a result, an international certification system for imported and exported diamonds was created. The sale of stones that have not passed certification is legally prohibited in many countries. The scheme was called Kimberley Process Certification (after the name of the city in South Africa). Independents question its effectiveness, as corruption is rampant in many African countries and the right documents are easy to obtain for a bribe.

The emergence and release of diamonds from the depths of the Earth

Scientists have found that a unique type of magma, known as kimberlite, can quickly cross the inner layers of the Earth, transferring diamonds. It is also known that kimberlite is the main matrix host of diamonds.

Diamonds are born at a depth of about 150 kilometers below the surface of the Earth and quickly rise up during eruptions of kimberlites, the speed of which can range from 18 to 133 km/h.

Kimberlite magma, rich in carbon dioxide and water gases, rises up like soda bursting out of a bottle that was shaken violently before. During this process, kimberlite takes diamonds to areas where they can be mined.

The authors of the study, published in 2023, drew attention to the fact that kimberlites most often explode during periods when tectonic plates are strongly rebuilt, for example, this happened during the collapse of the Pangey supercontinent - it included modern continents about 335-175 million years ago.

At present, a phase of fragmentation reigns on Earth, but in about 100-200 million years, land will again unite into a super-continent.

Notes