Diamond analyst Paul Zimnisky predicts that global diamond mining output will reach just 105 million carats this year, marking the lowest volume since 1995. In a recent article, Zimnisky emphasizes that this figure is particularly striking given that in 1995, diamond mining in Canada and Angola had yet to commence. Today, Canada and Angola rank as the world’s third- and fourth-largest diamond producers, respectively.
This forecast represents a historic low for global diamond mining, even below the 110 million carats produced in 2020 during the height of the COVID-19 pandemic. For context, the peak was 153 million carats in 2018, driven largely by the ramp-up of large-scale production at the Gahcho Kué, Renard, and Liqhobong mines.
De Beers: Lowest Figures Since 2020
In October, Anglo American, the parent company of De Beers, published Q3 2024 figures showing mining output of 5.6 million carats and sales of 2.1 million carats. According to Zimnisky, these numbers represent the lowest quarterly performance since Q2 2020, when the company – along with the broader industry – was significantly impacted by COVID-19 lockdowns.
De Beers has revised its annual diamond production forecast downward twice this year due to market conditions. The initial projection of 29-32 million carats has been reduced to 23-26 million carats. Zimnisky notes that this would be the lowest production level since De Beers began reporting this data in 2013. Anglo American has indicated that further reductions in diamond mining are being actively explored.
In addition to these sharp production cuts, De Beers has reportedly withheld approximately 4 million carats of its 2024 production from the market.
Alrosa Expands Inventory Instead of Cutting Mining
The forecast for a steep decline in global diamond production includes expected output from Russian diamond giant Alrosa, which is projected to reach 32 million carats – a 4% decline from 2023 and an 8% drop from 2022. Despite facing Western sanctions since the onset of the Russia-Ukraine conflict in 2022, Zimnisky explains that Alrosa’s management has suggested the company continues to operate at full capacity despite challenging market conditions.
However, Alrosa has significantly reduced its sales to the market, opting to sell its entire monthly production to Gohkran, Russia’s national reserve of precious metals and gemstones. In recent months, the company has chosen to stockpile inventory rather than reduce mining activities. Zimnisky estimates that Alrosa has stockpiled around 8 million carats this year, including diamonds sold to Gohkran.
The Lowest Figures Since the 1980s
When accounting only for diamonds actually sold to the market by mining companies, the supply figures for this year are even lower. It is likely that total market supply will fall below 100 million carats. According to Zimnisky’s data, the last time annual supply dropped below this threshold was 35 years ago, in 1989.
Supply is just one side of the equation, but Zimnisky argues that this reduction is a positive move for the industry. He suggests that these proactive measures will significantly reduce the inventory held by the industry as we head into 2025. This, in turn, could improve profitability and restore confidence in the trade – provided market conditions do not deteriorate further.
For the full article on the GJEPC website, click here
