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The Mining of Diamonds
This report focuses on the diamond industry in South Africa where, according to the Kimberley Process Certification Scheme (KPCS), 7.4 million carats were mined during 2014. Although this means South Africa was the world’s seventh-largest producer in terms of carats, KPCS statistics reveal it was the fifth-largest producer in terms of value. In total 10.4 million carats valued at US$1.7bn were exported in the same year. The domestic sector, which employs more than 13,000 people, is dominated by De Beers’ South African subsidiary, De Beers Consolidated Mines (DBCM). De Beers Sightholder Sales South Africa (DBSSSA) sorts and values DBCM’s rough diamond production and sells more than 40% of it to local diamond cutting factories and the State Diamond Trader during ten diamond sales per annum.
Falling Diamond Prices
As with all mining sectors, the challenges faced by the diamond sector include uncertainty resulting from regulatory changes, unreliable and reduced electricity supply, rapidly escalating production costs and falling rough diamond prices. Prices for rough diamonds fell approximately 15% during 2105 due to a variety of reasons: the economic slowdown in China, which resulted in weakened demand for diamond jewellery; stock market turmoil; and the difficulty cutters and polishers experienced obtaining credit. Following the decision to reduce production to better reflect current trading conditions, global diamond production has decreased.
The South African Diamond Mining report describes the current market and focuses on developments in the rest of Africa which is responsible for 60% of the world’s diamonds by value. Also detailed are investments into the sector, recent corporate activity and factors influencing the success of the domestic mining industry. The report profiles 11 companies, including the three major local players, DBCM, Petra Diamonds which mines diamonds from four kimberlite deposits, and Trans Hex which sources its diamonds from alluvial and marine deposits.