Instead of making luxury trips abroad, buying expensive meals and spending days at 5-star hotels, more people are investing their money in Diamond because of the increased restrictions slammed on them due to the Covid-19 pandemic.
This has therefore driven the demand for Diamond very high – the trade in this precious gem had almost hibernated before the onset of Covid-19 but its attractability has bounced back.
FurtherAfrica’s editor note: Several African countries rely on diamond exports to make up a large part of their foreign currency reserves. Botswana, Africa’s largest diamond producer, owes about a quarter of its GDP to diamond exports and the rare gem accounts for more than half of the country’s exports. De Beers controls sales of all rough diamonds mined by Debswana – the world’s leading producer of diamonds, in Botswana’s capital Gaborone.
Diamonds have for several years faced growing competition from travel as a form of luxury spending. Now, with vacations on hold due to lockdowns and other restrictions, consumers are putting their disposable income into online purchases.
Miner De Beers is poised for its biggest rough-diamond sale in three years, even after raising prices, and rival Alrosa PJSC said this week it expects the recovery will keep going for some time.
“Money was previously spent on trips or on dinners at expensive restaurants, but now part of this demand has gone to diamonds. Online sales almost doubled last year to about 20% of the total,” observes Alrosa Chief of Sales Evgeny Agureev.
According to industry experts, the annual diamond jewelry demand had been stagnant at about US$80B for the past five years and the sector’s middlemen were struggling to turn a profit.
A quick look at global diamond markets indicates a sharp rise in demand; for example, Signet Jewelers Ltd. reported a 7.8% jump in holiday sales in North America, by far the industry’s biggest market.
The jeweler’s online sales surged in the period. It was a similar story in China, the second-biggest market, where Chow Tai Fook reported an 18% rise in quarterly sales.
In India, where about 90% of diamonds are cut or polished, imported almost US$2B in rough diamonds last month as cutters and polishers raced to meet the increased demand and restock their inventories.
Meanwhile, De Beers and Alrosa have both responded by raising prices, seeking to recover some of the ground they lost last year when demand collapsed.
But while De Beers implemented an increase of about 5% in its first sale of the year last week, customers are still buying.
The sale hasn’t yet been finalised, but the miner was on course for its biggest rough-diamond auction in three years — at about US$600M — according to people familiar with the situation.