New highs for diamond prices

Diamond prices are expected to hit new highs over the next 12 months as the great divide between supply and demand widens. Prices would increase by up to 10% over the next year as the industry attempted to "balance the market", according to respected international diamond expert, South African-based James Allan, Principal of Allan Hochreiter finance group. At current production prices, that would equate to a rise of about $9 to about $99/ct.
"If you are actively involved in the production and sales of diamonds, the future looks extremely bright," said Allan, who was the opening speaker today of Day Two of the 2007 Paydirt World Diamond Conference in Perth. "Global diamond sales reached $72 billion in 2006 – an increase of 6%," he said.

"That is being driven by the US which accounts for about 43% of sales, but there are some new trends appearing. In China about 40% of Chinese women are now getting married with diamond rings, and that trend is expected to increase significantly over the coming years. India is a rapidly strengthening sector with a growth rate of 26% last year – and that will continue.

"Further, with the weakening US dollar diamond demand tends to pick up in other countries. So as demand increases and supply decreases, the market will balance itself by sharp increases in the price of diamonds from next year through to 2015."

He predicted the supply decline in many of the world’s major diamond producing countries would continue, with Botswana production expected to lose about $460 million production; Russia $260 million and South Africa $160 million between 2005 and 2015.

Brazil could well be the sleeping giant of the international diamond industry’s quest to make new discoveries, Redox Diamonds’ Chief Geologist, Grant Boxer, told the conference. He said Brazil had a long history of alluvial diamond production, and several of the majors, including Rio Tinto and De Beers, had "given up" in the region – making the country ideal for junior diamond explorers. "Many very large high value diamonds have been discovered in Brazil over the years."

"Recent developments in the geology of Brazil indicate that many areas considered ‘off-craton’ by previous explorers, are in fact, in ‘on-craton’ settings, and that significantly upgrades the diamond prospectivity of these areas. The region is ripe for second pass re-evaluation of data without the ideological constraints of the big companies."

As well as diamond projects in China and Tanzania, Perth-based Redox Diamonds is involved in a joint venture in Brazil with tenements covering over 1,000 km2 and which include about 150 kimberlite targets, 59 with kimberlitic indicator minerals to date. Redox plans to undertake bulk sampling on diamondiferous kimberlite targets in Brazil and Tanzania in 2008.

Other presenters today included:

Kimberley Diamond’s Arran Gracie
Rio Tinto Diamond’s John Chapman – Technology in the art of cutting diamonds
Stefan Schwank, from Germany’s Bauer Maschinen – Bauer Resources – Our future in Australia.
The conference closed with a panel session.