Paul Stothart is vice-president, economic affairs of the Mining Association of Canada. He is responsible for advancing the industry’s interests regarding federal tax, trade, investment, transport and energy issues. www.mining.ca
With due respect to cobalt and coal, it is fair to state that diamonds and gold are the world’s two most prestigious minerals. They are the minerals that hold the deepest emotional meaning among consumers, with traditional and cultural ties to commitment, union, luck, love and marriage. They are also the minerals that are most indicative of personal wealth, affluence, sophistication and social status. These two minerals and the corresponding industries have long shared a number of similarities in terms of the surrounding market-drivers, price mark-ups and social pressures.
For example, the fundamental driver of the global market in both gold and diamonds is jewelry. According to the World Gold Council, fully 68% of the world’s demand for gold over the past five years was for use in jewelry. While the delineation is less exact in diamonds, it is estimated that gem-quality diamonds used in jewelry account for over 80% of the value of the world diamond market.
A second point, and the converse from the above, is to note that the industrial application market for diamonds and gold is relatively modest in size. Only 14% of world gold demand stems from industrial uses (while the remaining 18% is for investment purposes). While there are important industrial uses in dental, electronics, medical and environmental fields, and growing potential in nanotechnology, these industrial uses for gold face the challenge of being commercially feasible at raw material price points that are currently well north of $1000 per ounce. Continue Reading →