De Beers to curb supply on weakening of diamond market


De Beers, the world’s biggest diamond miner by value, is scaling back production plans for this year as it tries adjusting to a brewing industry crisis that’s hitting prices and lowering demand for precious stones.

The Anglo American unit said a range of factors, including ongoing trade tensions between the United States and China, contributed to a 27% drop in earnings during the first half of the year.

Polished diamond and midstream rough diamond demand were impacted by retail store closures and destocking in the US, the world’s biggest market for diamonds, De Beers has said.

Elsewhere, sales were impacted by the trade tensions, protests in Hong Kong and a stronger US dollar, which particularly affected China and the Gulf.

De Beers said it expected the impact of ongoing challenges to be short term, and predicted a healthier industry outlook over the long term.

The company, once the monopoly supplier of precious stones, has been combating increasing competition from laboratory-made diamonds by producing its own at a lower cost than its peers.

Cheaper diamonds, which are often small and low quality, are selling for less now than six years ago. And when it comes to synthetic stones, De Beers’ entry in the market is creating a big price gap between mined and lab diamonds, pressuring rivals that specialize in synthesized stones at the same time.

A 1-carat man-made diamond sells for about $4,000 and a similar natural diamond fetches roughly $8,000. De Beers’ new lab diamonds will sell for about $800 a carat. That’s a fifth of the price of existing man-made stones and one-tenth of the cost of buying a similar natural gem.

The move has put pressure on polished prices, hurting the margins for De Beers’ customers who cut, polish and trade the company’s diamonds.

The company, with operations from Botswana to Canada, is far from turning its back on mined diamonds. It recently announced a $468 million investment in a new vessel to extract precious rocks off the coast of Namibia. While marine diamonds may be challenging to find, they are certainly worth the effort. According to the company’s own estimates, 95% of the precious rocks recovered from the sea are of “gem quality,” compared to just 40-60% of those mined on land.

Shekhar Ghosh is consulting editor, He has edited and written for publications like Business India, Business Standard, Business Today, Outlook and many other international publications. He can be reached at

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