In the diamond world, traditionally, each player in the pipeline focuses on their core strengths. Producers such as Botswana focus on how they can extract diamonds most efficiently, whilst also taking care to bring these natural rarities from deep in the Earth up to the surface without breaking or fragmenting them and their value.
The midstream focuses on cutting and polishing these stones, shaping them into their best possible condition and enhancing their famous four Cs – Cut, Colour, Clarity, and Carat. Retailers focus on creating breath-taking designs and developing the dazzling market strategies that wow consumers.
That structure has worked for decades, but the disruption caused in recent years by sanctions on Russian diamonds, global economic uncertainties, and most importantly, the explosion in the production and popularity of cheaper synthetic diamonds, means the industry is facing a moment of truth and some difficult choices.
Whilst the long-term fundamentals for natural diamonds indicate that demand will outstrip supply in years to come, due to the lack of a major diamond discovery in at least the past two decades, the industry’s troubles at the moment are due to a glut at the retail end extending back to the second half of last year.
The oversupply is associated with the dip in retail demand which in turn is related to general global economic uncertainties, the disfavour towards naturals caused by the continued flow of sanctioned Russian stones into the market, slower than projected Chinese growth, and the explosion in synthetics.
For natural diamonds, the industry has decidedly shifted from being supply-driven to demand-driven. For Botswana, the 55-year partnership with De Beers has essentially involved the country focusing on mining and the company shouldering the responsibility for marketing or creating demand for diamonds.
In fact, De Beers, which is the industry’s main player, spends upwards of $100 million each year in marketing campaigns, an effort that has benefited other players up and down the diamond pipeline.
However, the turbulence in the market means all hands are required on deck and producers such as Botswana are being called upon to help create demand for the stones which are so critically important for the livelihoods of so many.
“Establishing a diamond mine is a 10, 20, or 30-year project and it is very expensive, but at the same time, a small part of that investment must be spent to make sure someone is a consumer of those diamonds,” David Kellie, the CEO of the Natural Diamonds Council (NDC) tells Mmegi.
“There’s no point to that 30-year investment if you are not investing in making sure the output is going somewhere and is profitable.
“That is a growing recognition and that is why 2025 will be a critical year for us.”
Speaking from London, Kellie – who has more than 30 years of experience leading global marketing initiatives – says the NDC has approached producers such as Botswana to help with a budget to mount a major campaign for natural diamonds next year.
