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Diamond market

Sources of Diamonds

The primary sources of diamonds are very old, extinct volcanoes, or "pipes", known as kimberlites, which acted as the mechanism that transported diamonds from where they formed in the earth's mantle some 150 to 200km below the earth's surface tens of millions of years ago. The largest kimberlite deposits are found in Botswana, South Africa, Angola, Russia and Canada. The secondary sources of diamonds are deposits that contain diamonds that have been eroded from their primary kimberlite source rocks and carried down ancient river systems towards the sea. These are called alluvial or marine deposits, and those found on the west coast of Namibia and South Africa are among the largest that have been mined to date.

Rough Diamonds

The rough (uncut) diamond market consists of three very different segments - 'gem', 'near-gem' and 'industrial'. Gem and near-gem diamonds, which account for more than 95% of worldwide production by value, are used in jewellery and can vary in colour from pure blue-white, through pale yellow and brown, to the rarest pink or blue diamonds. Industrial diamonds, because of their inferior quality or undesirable colour, are used in industry for cutting, grinding, polishing, drilling and other technical and scientific applications. Global supply of rough diamonds in 2006 was estimated at around 175 million carats with a value of some US$13bn.

Supply and Demand

Mined production has been lower than demand since 2000, with the shortfall in supply being made up by sales by De Beers from its stockpiles. Following the sales of the De Beers' remaining stockpile at the end of 2005, a shortfall in supply is projected for the next 10 years, which is expected to result in significant increases in rough diamond prices.