The diamond mining industry was hit exceptionally hard during the credit crunch.
From August to December 2008 retail diamond sales had fallen 20% and diamond prices fell 30%. De Beers, the world’s foremost diamond miner had reported sales of less than $7 billion per year.
Things got so bad for the diamond industry; the Russian government was buying diamonds out of the market to help keep prices propped up.
All the effort, however, looked to have little impact in preventing further price declines. In early 2009 the New York Times reported a diamond industry analyst expected "demand for diamonds to decline by at least 60 percent [in 2009], leading to a further price drop of about 25 percent."
It was a tough time to be a diamond miner. And the future looked even worse.
Jump ahead to today and the industry has made a complete 180-degree turn. The global economic recovery is gaining momentum and diamond demand is rebounding quickly.
Recent research from Bank of Montreal (BMO) shows diamond demand is springing back quickly:
As you can see, diamond demand is surging back. It’s nearly back to pre-credit crunch levels, and in a few months, many industry experts believe diamonds will be more in demand worldwide than they were in 2008.
Supply is Lagging Way Behind
But here’s the thing, the diamond mining industry is still recovering from years of under-development and lack of exploration results.
Consider this – no new kimberlite (diamond hosting rock) deposits have been found in years. There have been tens of millions of dollars pumped into diamond exploration, but it has not paid off.
It gets even more interesting. Of the known kimberlite deposits, most are controlled by major diamond miners that either halted development during the credit crunch, or just put them on the back burner and kept them there.
In addition to that, opening up a diamond mine isn’t just like turning on a switch. It normally takes five to seven years to put a kimberlite deposit into production, and thus, even now that the diamond demand is surging, it’s going to take years for new supplies to come online.
http://www.vantagewire.com/blasts/20100421dmibottomline/
The BoN stressed that depressed global demand due to the worldwide financial crisis was not the only reason for the drastic fall in production in 2009. Namdeb had already decided in 2007 to shrink production, "as onshore diamonds systematically began to be depleted.
http://allafrica.com/stories/201004190676.html
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