Diamond miners are seeing increased demand for their gems but are scared they might not be able to keep up with the demand. Photographer: Andrey Rudakov/Bloomberg via Getty Images
Southern African diamond mining companies say there has been a marked increase in the demand for their diamonds since the ban on Russian diamonds.
Alrosa, a Russian state-owned enterprise and the world’s largest diamond mining company, has been sanctioned by the US, Canada, the United Kingdom, New Zealand, and the Bahamas over Russia’s invasion of Ukraine.
“These sanctions will continue to apply pressure to key entities that enable and fund Russia’s unprovoked war against Ukraine,” said Brian Nelson, the US under secretary of the treasury for terrorism and financial intelligence.
Alrosa produces 28% of the world’s diamonds and, in 2021, generated more than $4.2-billion in revenue, according to a US treasury statement. Alrosa is responsible for 90% of Russia’s diamond mining capacity.
This was in April and less than three months later Richard Duffy, chief executive of Petra Diamonds, said the company has already seen “record demand coming out of the US”.
Petra Diamonds operates in South Africa and Tanzania and has an exploration programme in Botswana.
De Beers, the second largest global producer of diamonds, said the demand for its rough diamonds has, so far, remained robust as a result of the prevailing supply and demand dynamics.
A huge mining truck hauls a big load of ore from the pit at Orapa mine, the largest diamond mine in the world in Orapa, Botswana. It’s owned by Debswana, a partnership between the De Beers Company and the government of Botswana. The mine employs about 3000 people and is also processing ore for the mine as well as two of Debswana’s other mines. The truck can carry about 245 tons of ore each time. The mine operates 24 hours a day, all year around. (Getty)
De Beers Group spokesperson Peta Gabriel said the demand from US retailers has been strong. She added that the US is the world’s largest market for diamond jewellery and some categories of rough diamonds come primarily from Russia.
Gabriel said De Beers’ production guidance for 2022 of 30 million to 33 million carats was unchanged because “we were already producing at capacity in response to the already strong levels of consumer demand for diamonds”.
This was reiterated at the 2022 Junior Indaba held at the Johannesburg Country Club last week.
Duffy said: “I guess the big question is on the demand side. We are all asking what the impact of a protracted Ukraine/Russia conflict will have on the global economic growth. Currently we have seen strong pricing [on diamonds] and a pullback for Russian diamonds.”
He said that although demand was high, Petra Diamonds would not be able to match the quantity of diamonds Alrosa supplies.
Brandon de Bruin, the chief operating officer at Gem Diamonds, which has a diamond mine in Lesotho and one in Botswana, said the sanctions meant Alrosa could not legally sell its diamonds on the market. “Manufacturers have been requested by retailers to give written assurance that they have not bought Russian diamonds.”
According to Statista, a market and consumer data company in Germany, the Alrosa group in 2020 produced about 30 million carats of diamonds closely followed by De Beers, at about 25.1 million carats.
Anathi Madubela is an Adamela Trust business reporter at the M&G.
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