FROM THE DESK OF RAJESH BAJAJ

Diamond Landscape

Whether it’s Anglo-American or DeBeers, both were initiated and led by the influential Oppenheimer family. They held a unique position in the industry, controlling and carting the journey of diamonds from rough to retail. Their influence was felt through DeBeers Consolidating Mines and DeBeers Group, which managed every diamond with successful business policies. Their impact on the market was profound, with their iconic slogan ‘Diamond is Forever’ symbolizing their dominance.

They convinced the diamond fraternity to live up to the ‘diamond standard ‘, a term coined by the Oppenheimer family to represent the highest quality and ethical standards in the diamond industry. This legacy, which continues even after the Oppenheimer family’s departure in 2011, has shaped the industry’s practices and consumer expectations. Their exit marked a significant shift in the industry, as they sold their shares to Anglo American, a move that likely reflected their foresight into the future of the diamond landscape.

The Oppenheimer family, known for their strategic thinking, carefully considered the future of the diamond industry. They anticipated increased competition from Alrosa and the potential for HPHT to CVDs or LGDs. These factors likely influenced their decision to sell their share of DeBeers to Anglo American in 2012, demonstrating their ability to adapt to changing market conditions.

In those days, many shifts happened. Yet, a silent wave created a different frequency that passed the message, Leave up diamonds! Immediately, BHP Billiton reviewed its portfolio and resolved to sell its Canadian Ekati diamond operation; it slashed diamonds from its portfolio!

Despite managing DeBeers for a decade by changing numbers of administrative changes, Anglo American is on the verge of reviewing their portfolio. Anglo American argues that the chart of sales for DeBeers is on a tumbling spree, with the diamond price experiencing a significant decline. This has led to piling inventories and booked a loss for the DeBeers in 2H, 2023, indicating a soft trend in the diamond market.

Often, public and press statements are mere posturing! Generally, no establishment releases a real brainstorming and its takeaways! Despite the absence of Russian diamonds in the market since the announcement of those Bans! Despite growing LGDs are trying to cut their pie yet, struggling to settle a tumbling price in the year 2024!

Since Anglo American is reviewing its portfolio, and again, DeBeers is a key focus, the Minister of Finance, Russia, immediately announced their review for Catoca Mining, where Alrosa holds about 41% and has been working in Angola since 1992. Additionally, Lucapa, which holds about 70% of the stake in the Mothae Mine, is on a review spree!

So, once again, key diamond players are following the DeBeers and reviewing their stake in the natural diamond (ND). Once again…DeBeers leader will say; Shift Happens! Yet, the critical question is, where we head with NDs! How to scale Lab Grown Diamonds (LGD) s! How do you manage both of the categories until the retail?

The top of the pyramid is still not leaving NDs. NDs have their market value, and compared with the LGDs, NDs will preserve their value for a long while. Being an industrial product, its quantity could be unlimited, and it’s a subject of oversupply!

Whenever supply grows over demand, the price softens! Here, LGD productions are unregulated, and the market always lives under fear of oversupply and tumbling prices of LGDs! In the row, LGDs have to develop their stature as Couture and Fashion jewelry for notable value addition with cutting-edge design and finishing with an impressive story!

It is noted that LGDs can be called and classified under the Giffen Goods in economics. It will remain harmful for LGDs to settle at a too-low price tag and tumbling instinct! The LGD player has to learn more from the pearl Industry and market and its stature upon losing its quality of Rarity! Any luxury buyer also pays high for being rare!

As the diamond industry evolves, diamond cutting and polishing (C/P) players must take strategic action. They must manage and maintain skillful inventories and cost-effective C/P. Similarly, diamond mining is under review to control production costs. At the retail level, it is essential to remember that products without a good margin should not be pushed or projected.

The retail fraternity must be well-informed about natural diamonds. Retail players have a responsibility to educate and maintain buyer trust. Buyers should have the utmost confidence in their purchases. The entire diamond pipeline is undergoing a significant shift, with LGDs growing to achieve a notable scale and NDs needing to preserve their value and natural sparkle over LGDs as a luxury item.

Shifts happen! In 2012, the NDs witnessed several shifts in a row! Well, in those days, it was unknown how those LGDs would enter the market, how that would disrupt the NDs segment, and how far those LGDs would influence a diamond buyer!

Now, in the current shift, the diamond industry and trade are aware of all the pros and cons of both NDs and LGDs. This is the time to educate the buyer about the right facts about both NDs and LGDs.  

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