Can The Diamond Industry Clean Up Its Own Mess?

Opinion piece
27/11/2015 23:21

Rob Bates of JCK takes an insightful look into the troubles that have plagued the diamond industry in the second half of 2015, and analyses the internal bickering that has resulted. Only a short time ago, De Beers was the crown jewel in the tarnished Anglo American crown, but now, at the end of 2015, the bottom has fallen out of the diamond business. De Beers’ second-half sales will likely come in at $1.2 billion–$1.3 billion, a 30-year low. Bates writes that while De Beers' sightholders were vocally expressing their difficulties, "with all the pressure from Anglo and producer partners, De Beers had little incentive to stop squeezing clients’ margins as long as they kept buying." As the crisis grew in severity, there is a lot of talk now whether to “blame” De Beers for the current mess.

While, as De Beer CEO Mellier said, buyers ultimately have responsibility for what they purchase, and the prices they pay, Bates says that, "it is hard to view any strategy that produces the lowest half-year sales in 30 years and drives customers to the brink of bankruptcy as sound or smart. Yes, the market has issues, but De Beers has to deal with the industry that exists, not the one that it wishes." Are solutions on the horizon? Bates addresses a few, but concludes that, "We have lately seen more industry-wide attempts to increase demand and stop the bleeding. It may still take a long time before the industry emerges from this largely self-created mess.