Worldwide Diamond Production Will Increase by 1.4% in 2021 as Demand Recovers, reveals Global Data
After a 19.4% drop to 111.4 million carats in 2020 due to COVID-19, the global rough diamond output is predicted to recover by 1.4% in 2021, reaching 112.99 million carats. While considerable output recoveries are projected in Botswana (+37%), Canada (+16.6%), and Angola (+26.3%), the aggregate worldwide output will only improve marginally due to the closure of Australia's Argyle mine in November 2020, and only modest growth in Russia.
The COVID-19 pandemic wreaked havoc on the world in 2020, which was already reeling from a slew of issues, including the ongoing US-China trade war and political unrest in Hong Kong, one of the most important trading hubs. Operating activities and cross-border travel were significantly hampered due to the pandemic.
China was massively hit in Q1 2020, but it was also the first to refill and get back in shape, making it a crucial driver for the balanced global demand for diamonds. The gradual lifting of other areas enhanced market conditions and bolstered demand across the global supply chain. Demand in crucial consumer areas such as the United States and China began to recover around the end of 2020.
Because of the pandemic measures and limitations, retailers in the United States have postponed their Christmas holiday specials to enhance online sales. On the other hand, China's shopping celebration days, such as September 9 and November 11, were a massive success in 2020. Online marketing and e-commerce festivals, on the other hand, have grown in popularity and improved customer trust in online transactions.
In the meantime, the pandemic had the most significant impact on Botswana's production, which fell by 28.5% to 16.9 million metric tonnes in 2020. The drop was mainly due to planned declines in reaction to decreasing demand for rough diamonds because of COVID-19, and operational issues at Debswana's Orapa mine, which resulted in lower output, below expectations.
Looking into the future, with mines resuming operations and demand showing signs of improvement, the country's rough diamond production is expected to rebound, rising by 37% to 23.2Mct in 2021, before declining by 2.2% in 2022 due to the closure of the Damtshaa mine, and then remaining comparatively flat for the remainder of the forecast period. For now, Debswana Diamond, Botswana's largest producer, expects to return to pre-COVID-19 degrees between 2021 and 2023.
In general, the output is predicted to expand at a CAGR of 2.5% over the forecast period 2021–2025, reaching 124.8Mct in 2025. Russia is likely to remain the world's leading diamond supplier, as it owns some of the world's most significant diamond mines. Botswana, Canada, and the Democratic Republic of the Congo (DRC) are likely to remain significant producers of rough diamonds to global markets as new diamond mines are developed. Moreover, Angola will break into the top five worldwide producers, eventually exceeding the Democratic Republic of the Congo to become the fourth-largest producer by the end of the projected period.
Due to declining ore reserves at the Argyle mine, which began production in 1983 and with halted production in November 2020, production in Australia will continue to drop. Given the current state of the Ellendale mine, Australia's diamond production will practically halt at the end of 2020.
Nevertheless, the Australian diamond industry may be revitalised due to the advent of multiple mining corporations currently conducting various exploration efforts to nurture possible diamond reserves. Besides, on May 24, 2021, Lucapa Diamond entered a contractual deal with Merlin Diamonds to purchase the Merlin mine, providing some hope for the Australian diamond industry following the closure of Argyle. To entice investors into diamond mining, the Northern Territory government decreased the royalty rate on precious stones to 5% in July 2020, a 2.5% reduction from the previous rate of 7.5%.