Investor Alert: De Beers Forecasts Diamond Price Jump By 2020
Diamond extraordinaire De Beers cautioned on Tuesday that global production of the gemstone will decline from 2020, suggesting prices for diamonds could increase exponentially.
"Unless major new discoveries are made in the coming years, supply can be expected to decline gradually from 2020," De Beers said.
According to the inaugural “Diamond Insight Report,” published by the De Beers Group of Companies, a reduction in supply from existing sources will likely not be matched by new production. Diamond supply is expected to flatten out in the second half of the decade before declining in 2020 and onwards.
Diamond mines in Botswana, South Africa and Namibia are becoming exhausted, forcing mining companies to dig deeper, making operations less profitable.
The three principal input costs – labor, electricity and diesel – have all seen increases well above local inflation levels in the primary diamond producing countries over the last decade, and the trend is set to continue.
De Beers is now turning its sights on Angola, the Democratic Republic of Congo, Zimbabwe, the Siberian Arctic and Canada.
Global demand for diamonds
The report also highlighted the demand for diamonds, which is expected to continue to grow, driven by the U.S. and from growth of the middle classes in developing markets such as China and India.
"Even under scenarios of volatile or weaker global economic growth, demand for diamonds is expected to show positive real growth in the next decade," De Beers said.
Global demand for diamond jewelry reached a record high of $79 billion in 2013.
"China and India, the engine for growth, these two big markets clearly could be as big as the US in the next maybe 15 years," De Beers's CEO, Philippe Mellier said. In addition, he expects the Chinese market to grow at more than 10% per year for "many more years".
While a supply shortage and price hike may not necessarily be good for consumers, it’s not such a bad thing for De Beers. The company accounts for roughly 33 percent of global rough diamond sales.
Newmont acquires Canada’s GT Gold in $325mn deal
Newmont, the world’s biggest gold miner, has acquired Canada’s GT Gold in a deal worth $325mn. The gold giant now controls the Tatogga gold-copper project in the Traditional Territory of the Tahltan Nation.
“With the acquisition of GT Gold and the Tatogga project in the highly sought-after Golden Triangle district of British Columbia, Canada, Newmont continues to strengthen our world-class portfolio,” commented Newmont President and CEO Tom Palmer.
“We look forward to continuing to build a respectful and meaningful relationship with the Tahltan Nation, including the community of Iskut. The relationships we have with Indigenous communities, First Nations and host communities are critical to the way we operate. We will partner with the Tahltan Nation at all levels, and with the Government of British Columbia to ensure a shared path forward as the Company understands and acknowledges that Tahltan consent is necessary for advancing the Tatogga project.”
Newmont’s acquisition includes the Tatogga project, comprised primarily of the Saddle North deposit, which has the potential to contribute future significant gold and copper annual production. There are also further exploration opportunities beyond the known deposits at Saddle North within the land package. The Tatogga project adds to Newmont’s existing interest in the prospective Golden Triangle through the company’s 50% ownership in the Galore Creek project.
Newmont is the world’s leading gold company and a producer of copper, silver, zinc and lead. A world-class portfolio of assets, prospects and talent is anchored in favourable mining jurisdictions in North America, South America, Australia and Africa. The American miner is celebrating its 100th anniversary this month.
With gold prices on the rise, the last six months has seen gold industry M&A activity accelerating. A recent Mckinsey report, advises that the industry need to be mindful of mistakes made during the previous gold price boom, when growth was chased unidirectionally by several companies.