A first (rough) look into 2017 diamond production

World diamond production

After almost a decade of production stagnation around 130 Mct, Kimberley Process 2017 diamond annual production data show a marked production jump for diamonds. Production of rough diamonds rose from 134 Mct and US$12,4 bn (2016) to 151 Mct and US$15,9 bn (2017), an apparent return to pre-2008 levels (not there yet, but getting closer) – data from the Kimberley Process (KP).

South African production explains most of the jump in value recorded in KP data. It more than doubles previous year’s South African production value and it is a record value. Most probably I am missing something: can this be, or is the published data wrong? again, drop me a line to comment on this.

The sharp (12,5%) increase in rough diamond volume production is due to:

  • +  3,1 Mct in Australia;
  • +  2,5 Mct in Botswana;
  • + 10,2 Mct in Canada;
  • –   4,3 Mct in DRC;
  • +  0,8 Mct in Lesotho;
  • +  2,3 Mct in Russia and
  • +  1,4 Mct in South Africa.

The even sharper (28%!) value increase was due to:

  • +   483 M USD in Botswana;
  • +   663 M USD in Canada;
  • –     89 M USD in DRC;
  • +   533 M USD in Russia and
  • + 1 840 M USD in South Africa.

World diamond value

 

One decade of ups and downs in rough and cut diamonds

Quarterly Zimnisky Rough Index.png

Indices.png

The last two decades have been a carrousel of emotions in the mining industry:

  • Oil and gold prices had steadily been growing since 2001. Oil spiked to maximum historical values in 2008 (and then crashed, to climb again for 3 consecutive years, plateau for 4 years, until mid 2014, crashing again, reaching nominal values of 2005, and recovering marginally since then).
  • Gold has had a more regular pattern, growing since to 2001 until 2011, maintaining a high plateau until the end of 2012, crashing until mid 2013, becoming relatively stable since then.
  • Polished diamonds have shown a much less volatile behaviour, with some ups in 2008 and 2011 (mimicking the markets’ general mood) but rapidly stabilising into a nominal stability (a slow real price decline).
  • Rough diamonds prices rose roughly 50% in nominal terms (as measured by the Zimnisky Rough Index) since 2007, a more subdued increase in real terms. The price increased in the 2009 – 2011 period, after which it stabilised until early 2015, after which it slowly declined until today.

Why are diamond prices less volatile than other mineral commodities’?
Why do rough and polished prices behave differently?
New deposits discovery and production capacity expansion seem increasingly difficult; why don’t diamond prices increase significantly in real terms?
Are there two different markets in diamonds?
What is the impact of new recovery technologies (XRT) in diamond markets?

Will discuss that in the next post. What is your opinion?

The oil and gold indices were calculated by just dividing the monthly gold average nominal price in US dollars by their price (nominal US dollars) in January 1980.

The Antwerp Diamond Index is a set of indices used to measure the price variation of five types of polished diamonds. The index is based on prices in US $ and gives the average price evolution on the Antwerp market of diamonds ranging in colour from exceptional white + to white and in clarity from LC to VS2:

  • 1 ct diamonds (1973 =100)
  • 1/2 ct diamonds (1973 =100)
  • A = Small Brilliant (1980 =100)
  • B = Melée (1980 =100)
  • C = 1/4 ct diamonds (1980 =100)

The Antwerp Diamond Index is maintained by the Diamond Office of The Antwerp World Diamond Centre (AWDC). To know more about AWDC and the Diamond Office , just visit their website: https://www.awdc.be/en/diamond-office.

The Zimnisky Global Rough Diamond Price Index was created to consolidate rough diamond price information and publish current respective price changes of rough diamonds on a weekly basis in the form of an index.  The intent of the Index is to track, analyze, and disseminate current aggregate rough diamond price fluctuations for use by a range of diamond industry participants.

The proprietary index methodology primarily incorporates price data from rough diamond transactions in the primary market, e.g. sales via long-term contract, tender, and auction by commercial miners. The Index also includes a minor sensitivity to polished diamond prices, given that miners utilize the polished market as a factor when determining contract pricing of rough. In addition, the Index includes a minor sensitivity to stand-alone diamond mining equities, as the relative liquidity that equities provide can imply the current profitability and revenue generation ability of diamond miners, which is directly influenced by the current rough diamond market.

Given the nature of natural diamond production, the variance in quality of stones produced, or the product mix, can impact global rough diamond prices on an average price-per-carat basis. The Index strives to represent as accurately as possible current price changes reflected in the average rough diamond transaction valued on a per carat basis in U.S. dollars. The Index value does not directly represent the price of a 1-carat rough diamond, but the percentage change in the average value of a rough diamond transaction relative to the initial Index value, at a given point in time.

The Index is based on an initial value of 100 using data starting on April 4, 2004. The Index is updated on a weekly basis, typically on Saturday. Retroactive revisions to index data are made on a quarterly basis typically after public miners release official quarterly sales figures.
(adapted from http://www.paulzimnisky.com)

To know more about the Zimnisky Global Rough Diamond Price Index, or obtain Paul Zimnisky’s insight on the diamond markets, check http://www.paulzimnisky.com.

+10 M USD: Williamson kimberlite pink diamond sold

Petradiam_000541

Petra Diamonds Limited sold the exceptional 23.16 carat pink diamond recovered from the Williamson mine in Tanzania in November  into a partnership, with Petra receiving US$10,050,000 (US$433,938 per carat) for the rough stone, as well as retaining a 20% interest in the sales proceeds of the polished.

The diamond was bought by Golden Yellow Diamonds on behalf of M.A. Anavi Diamond Group, a leading diamond manufacturer and specialist in large and unique coloured diamonds.

Photos of the 23 carat pink can be viewed at the Company’s website.

Follow the link to to read Petra’s full news release.