Cape Town, South Africa — MININGREVIEW.COM — 11 February 2009 – Global demand for rough diamonds is expected to drop by some 60% this year as the global recession hits demand for luxury goods.
This is the opinion of Tacy Consultants principal Chaim Even-Zohar, who told the Mining Indaba that the United States market was vital for the diamonds industry. “The diamond story has fundamentally changed in the last year, and under the present scenario, demand for rough diamonds will drop by some 60% in 2009,” he said.
Even-Zohar sadded that he expected the demand for polished diamonds from the retail sector, excluding the final consumer, to go down by 33%, leading to a significant drop in the US$20 billion (R200 billion) in diamond sales recorded last year.
The world’s top diamond producer De Beers – 45% owned by Anglo American Plc – said last month that it wanted to slash production by a significant amount, and to lay off about a third of its 3 500 workers in South Africa.
Other producers followed, saying prices might have dropped by as much as 50%. Even-Zohar said the financial crisis and economic slowdown were only partly why the industry was suffering, pointing to the need for restructuring and consolidation as another reason.
“We have a structural problem in the diamond business that needs to be solved. We need to clean up and to consolidate, and we are doing it now. The crisis is a blessing in disguise,” he said, pointing to companies being forced out of business or peers consolidating as a result of the crunch.