A Strategic Review of the Diamond Mining Industry in Central and Southern Africa

Rising Global Economic Growth to Enhance the Diamond Mining Industry in Southern and Central Africa

Rising global economic growth and increasing household wealth in the United States, China and India are boosting the diamond mining and processing industry in central and southern Africa - the world's largest and most concentrated source of diamonds. "The global economy which has been growing at an average rate of approximately 5 per cent over the last decade, emerged as one of the major drivers of the diamond mining industry in Central and Southern Africa," says the analyst of this research. "Increasing disposable incomes have enabled consumers to spend on diamonds and other luxury goods, further spurring market expansion." Central and southern Africa hosts about 65 per cent of the world's diamond reserves and accounts for approximately 60 per cent of the global new mine supply of rough diamonds, making it the region with the greatest diamond exploration potential. The region will remain a major source of global new mine supply of rough diamonds in the medium-to-long term.

However, in recent years, high-quality synthetic diamonds have entered the jewellery market, and the technology used to manufacture them is rapidly improving. The availability of synthetic diamonds at drastically lower prices is a challenge to the growth of the natural diamonds market. Additionally, the global economic downturn has dampened the demand for diamonds and other luxury goods, as disposable incomes have declined. "The downstream diamonds and luxury goods market is intensely competitive with a wide range of brands competing for a share of the consumers' disposable income," explains the analyst. "Well-established and enduring brands are likely to better placed to withstand the competitive pressures in this market".

Despite the limited upside potential for diamond prices in the short-to-medium term, diamond mining companies in central and southern Africa are poised to enjoy significant growth once the effects of the global economic slow down start receding. "Diamond mining and processing companies in Central and Southern Africa need to position themselves during the downturn and be able to swiftly respond to changes in the global economy," concludes the analyst. "Although the immediate concern for most executives in the diamond mining industry is securing the future and survival of their companies amid the debilitating effects of the slowing global economy, it is also important that diamond mining companies be able to respond rapidly to an upturn in the global economy."