Expressing about the diamond market, Lucara Diamond said in 2Q report that the long-term outlook for Natural Diamond (ND) prices remains positive due to improving supply and demand dynamics due to long-term reductions from major producing mines.
However, the market for the smaller size stones remains soft as demand is impacted by a weak Asian market and laboratory-grown diamonds. Demand for larger stones over 10.8 carats remains robust, as reflected in the Company’s sales.
The G7 sanctions on Russian diamonds over one carat, effective March 2024, have caused some trade delays. New regulations require these diamonds to be processed through the Antwerp World Diamond Centre for origin verification. The Company views this as short-term support for diamond prices, as the emphasis on stone provenance increases.
Lucara, with its established operations producing exceptional Botswana diamonds, stands to benefit from this heightened focus on origin verification. Sales of laboratory-grown diamonds increased steadily through 2023 and into 2024 with many smaller retail outlets increasingly adopting these diamonds as a product.
In Q2 2024, De Beers announced it will cease creating synthetic diamonds and direct its efforts to sell natural diamonds. This is in conjunction with several major brands confirming that they would not market laboratory-grown diamonds.
The overall long-term impact will support the natural diamond market as the Company expects to see bifurcation between the natural and laboratory-grown diamond market in the medium term. The longer-term market fundamentals for natural diamonds remains positive, as demand is expected to outstrip future supply, which has been declining globally over the past few years.
