Diamond miners, including Russia’s Alrosa, are going through a difficult period: prices for diamond products have fallen by almost 40% from their peak in the spring of 2022, and producers are forced to reduce production. What caused the decline and is there hope for a market recovery?
Forbes investigated
The diamond industry is experiencing one of the deepest and longest recessions in decades, writes Bloomberg. “The decline that began after the pandemic has intensified: inflation has affected consumer purchases, and the collapse in the Chinese luxury goods market has further undermined demand,” the agency notes. “Synthetic diamonds are also contributing to lower prices.”
The IDEX International Diamond Exchange diamond price index fell by almost 40% from 168.39 points on March 7 to 96.75 points on December 11, 2024. The American consulting company Rapaport reported that Alrosa and its main competitor, De Beers, responded to the market situation by reducing prices for rough diamonds. De Beers’ decline was 10-15%, while Alrosa’s was 5-15%, Rapaport claims.
According to Alrosa CEO Pavel Marinychev, the company, which controls almost a third of the world’s diamond mining, is considering suspending production at a number of the least profitable sites in 2025 and optimizing costs, including personnel costs. However, he did not say how much its production could be reduced. Last year, Alrosa reduced it by 3%, to 34.6 million carats from 35.6 million carats mined in 2022. De Beers intends to reduce production this year by approximately 3 million carats, to 23-26 million from the previously planned 26-29 million carats.