London – The global diamond market faces a “fragile recovery” in spite of efforts by De Beers to stabilise the sector, according to the head of the company. Philippe Mellier highlighted how De Beers, the world’s largest diamond producer by value, cut output last year to try to revive the market amid waning demand for diamond jewellery, partly because of China’s economic slowdown.
“It’s a very fragile recovery. The market is not going to bounce back like it did after the last big problems,” he said in a Financial Times interview, referring to the recovery after 2009, when De Beers cut output by half following the global financial crisis that choked off diamond buying.
De Beers, a subsidiary of Anglo American, has been hit hard by the latest downturn in the diamond market. It reported earnings before interest and tax of $571m for last year, down 58 per cent compared with 2014.
This reflected how global diamond jewellery sales fell 2 per cent in 2015, to $79bn, because of reduced buying — notably in India, Japan, Russia and the Middle East.
Prices of polished diamonds declined amid a supply glut, which meant financially stretched cutting and polishing companies struggled to clear their stocks of rough gems.
This in turn prompted diamond mining companies led by De Beers and Russia’s Alrosa to either slow production or hold back supply. De Beers, for example, reduced its volume sales of rough diamonds by 39 per cent last year.
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