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INDUSTRY OVERVIEW

Diamond mines are extremely rare, and the world supply is expected to remain essentially flat over the next few decades as demand increases. New supply is in high demand. Canada is the first country in the developed world to produce and market high quality diamonds, and is benefiting from an increasingly important role in the global market.

In 2012, diamond miners (such as ALROSA, De Beers, and Rio Tinto) produced 128 million carats of rough diamonds, valued at US $15 billion. Once out of the ground, the rough diamonds move through the so-called "diamond pipeline," a value chain that runs from dealers to diamond cutters and polishers, to jewely manufacturers, to retail stores, and finally to consumers. The value added along the way is impressive, with US $15 billion in rough diamonds becoming US $24 billion in polished diamonds, which in turn goes into diamond jewelry with a retail value of US $71 billion.

The supply of rough diamonds in 2012 fell 28% from a peak of 177 million carats produced in 2005. Production decreases at De Beers and Rio Tinto accounted for the bulk of the decline. ALROSA maintained its production levels.

Between 2012 and 2020, worldwide demand for diamonds is expected to grow by 5.9 percent annually, which will outstrip supply, which is only growing by 2.5 percent annually. The largest new mine will be Gahcho Kué, which will produce up to 6 million carats annually by 2020.  

In Canada, the average realized price is about US $110 per carat, compared to US $15 per carat in Australia, which produces 19% of the world’s total carats but only 4% by value. The world average is US $80 per carat.