Diamond mining industry cracks under pressure

The global diamond industry is undergoing a rapid and unprecedented collapse, according to tech entrepreneur and academic Leanne Kemp, though some industry analysts argue that while the downturn is severe, it is not terminal.Plunging revenues, halted operations and growing doubts about diamonds’ cultural and economic relevance are just some of the symptoms cited by Kemp, who insists the industry isn’t just slumping. She said it’s “disassembling”.The past quarter has laid bare the severity of the crisis. Anglo American’s (LON: AAL) De Beers, the world’s largest diamond producer by value, saw a 44% revenue drop and is sitting on $2 billion worth of unsold stock. The company plans to cut over 1,000 jobs at its Debswana joint venture, according to the mine workers union, even though the operation is the backbone of Botswana’s economy.Russia’s Alrosa, under heavy sanctions, reported a 77% plunge in profits and halted operations at key mining sites. Petra Diamonds (LON: PDL), battered by a 30% decline in sales, lost its CEO  and has now two people in that position while it sells off assets to stay afloat. Lucapa (ASX:LOM) in Australia entered voluntary administration last week, while Sierra Leone’s Koidu Limited shuttered operations and laid off more than 1,000 employees after losing $16 million to labour strikes. Even Lucara (TSX: LUC), which operates in both Botswana and Canada, is now facing a “going concern” warning, despite continued investment in its Karowe mine and production records.“These are not isolated events. They are symptoms of an industry whose cost structures, cultural relevance, and geopolitical foundations are no longer fit for the moment, Kemp writes.The entrepreneur notes the diamond’s traditional narrative of permanence, romance and rarity no longer resonates in a world that demands ethical sourcing, sustainability, and transparency.But not everyone sees an existential threat. Industry analyst Paul Zimnisky offers a more tempered view. “This has been a painful period, especially over the past three years,” he told MINING.COM. He attributes much of the downturn to a post-covid demand correction after record sales in 2021 and 2022, a luxury recession in China, and the disruptive rise of lab-grown diamonds.Zimnisky argues the easing of these pressures could return the sector to growth. Still, he acknowledges that the industry’s fate hinges on its ability to rekindle desire for natural diamonds. “If the industry gets lethargic and loses its way on the marketing front, all bets are off,” he warned.For ever?The spotlight now falls on De Beers. Once synonymous with manufactured scarcity and aggressive branding, the company is up for sale. Anglo American has cut its valuation by $4.5 billion in just over a year, and no buyers have emerged. Earlier this month, De Beers announced it would shut down its lab-grown diamond jewellery brand, Lightbox, signalling a return to its roots and a renewed focus on natural diamonds, which inspired the iconic “Diamonds are Forever” slogan. The move marks an effort to reposition the company amid growing pressure on the industry.Kemp believes the future of diamonds lies in verifiable origin and ethical narratives, not in nostalgia. Zimnisky, while optimistic about De Beers’ future under new ownership, agrees that the cultural meaning of diamonds is shifting. “There are constantly changing cultural norms and behaviours,” he noted.Fresh campaigns are targeting Zillennials, the microgeneration born between 1993 and 1998. (Image courtesy of De Beers.) Some have proposed repositioning diamonds as stable, tradable assets. But Zimnisky is sceptical. “Diamonds are not fungible like gold,” he said. “There’s more friction in secondary trading. Still, the rarest and highest quality stones will continue to be seen as stores of value.”For economies “sensitive” to changes in the diamond market, such as Botswana, Canada, Namibia, Angola and Russia, the stakes are high, says Zimnisky. He notes the lesson of recent years is clear: storytelling and marketing are now critical. “This is a luxury product — it needs to be merchandised as such. All stakeholders must contribute to shaping the message.”The old era of diamonds, rooted in mystique and monopolies, is ending. What comes next must be leaner, more transparent, and grounded in today’s values. The glitter hasn’t gone, but it needs a new reason to shine.Weiter zum vollständigen Artikel bei Mining.com Weiter zum vollständigen Artikel bei Mining.com