World Economy

World May Run Out of Diamonds

World May Run Out of Diamonds
World May Run Out of Diamonds

De Beers, one of the world’s top sellers of diamonds, appears to be running out of precious stones, as indicated by reduced production, at the same time, prices are falling.

London-based De Beers is looking for a new diamond deposit in Botswana’s Kalahari Desert as its supplies become exhausted, the Wall Street Journal reported on Friday, Sputnik reported.

Analysts from McKinsey & Co., a top multinational consulting firm, say that diamond production will reduce after 2017 unless new discoveries are made. The precious stones are among Africa’s most valuable commodities. They are even harvested in war zones, where ‘blood diamonds’ have been used to fund conflicts. However, demand for the gemstones has fallen in recent years.

“If you look on a long-term basis, the deposits are not being found. The rock that hosts diamonds is very rare,” mining analyst Phil Swinfen said.

At the same time, diamond prices are falling as a result of decreased demand. Diamond prices fell 6 to 8% in the first half of 2015, even though De Beers’ production fell 27% over the past year and its sales in the third quarter fell 59% compared to 2014.

But Russia’s Alrosa says that it has enough reserves to continue production for another 17 years.

The recent drop in sales and prices in the world diamond industry should be attributed to a regular cyclical development, Ari Epstein, the CEO of Antwerp World Diamond Center told Sputnik on Thursday.

“We are not among those who have been calling (a challenging year for the global diamond industry in 2015) a ‘crisis’. That word makes for dramatic headlines, but is often overused, especially when the so-called crisis is really just a cyclical development that will receive its appropriate reaction,” Epstein said.

According to Epstein, diamond demand will eventually pick up, particularly when the Chinese economy stabilizes after its stock market plummet.

Russia has strengthened its position in the diamond sector despite the country’s economic difficulties, Epstein said.