Industry Analysis

Survey Shows: Diamond Sales Increased Last Year


Placeholder Alt Text
Retail diamond jewelry sales topped $77 billion worldwide, according to a recent survey. The U.S. accounted for about half of that total. Above, a sales associate at Finell's Jewelers in Carlsbad, California shows a diamond ring to a customer. Photo by Valerie Power/GIA

Retail sales of diamond jewelry worldwide totaled an estimated US $77.5 billion in 2017, up from $74.6 billion in 2016, according to a survey by Tacy/Pharos Beam Consulting. This was the first sales increase in two years, according to the survey.

On the mining side, Tacy reports that the total mine production cost of rough diamonds was $7.5 billion last year, which nearly doubled to $14.72 billion in mine sales to the industry. De Beers sold $5.27 billion; Alrosa sold $4.17 billion; and other sales totaled $5.28 billion.

Diamond manufacturers’ polished output totaled $20.15 billion at wholesale prices, but sold $19.7 million into the market, leading to a supply overhang. Tacy estimates that some $300 million in recycled diamonds re-entered the market last year. Some sources peg that total at more than $1 billion, however.

De Beers’ Diamond Insight estimate of world diamond retail sales last year is $82 billion, with the U.S. accounting for $42.5 billion. Tacy puts U.S. sales at $37.3 billion. Tacy combines China with Hong Kong/Macau and Taiwan ($11.89 billion) while De Beers lists China mainland sales only ($9.85 billion.)

De Beers’ rough sales at its July cycle were lower than expected, about 8% below the July 2017 allocation and well below June’s totals. The $530 million sales total “reflected the seasonally quieter summer sales period for the midstream (diamond manufacturing) sector,” said CEO Bruce Cleaver.

DE BEERS MINES

De Beers is closing or selling mines at a much greater rate than it is commissioning new ones. Three years ago, it sold off nearly all of its South African operations and last year closed the Snap Lake Mine in Canada. It will also close the Victor mine in Canada and possibly shut its Namibian land operations next year.

De Beers will have only one operating diamond mine in South Africa by the end of this year: the Venetia operation, which is undergoing a $1.5 billion conversion to an underground mine. The company decided to close the Voorspoed mine in December, after 10 years of operation, because of high operating costs. Continuing production would have involved an expensive enlargement of the open pit and the grade was far below average, with revenues averaging less than $50 per ton, which is only about 20% the grade of its most profitable operations. The mine produces about 800,000 carats yearly and is a partnership between De Beers and the South Africa Black-Empowerment enterprise, Ponahalo Holdings.

The company’s only new mine this decade is the Gahcho Kue mine in Northern Canada, which it commissioned early last year.

Russell Shor is senior industry analyst at GIA in Carlsbad.