De Beers CEO Offers Hope for Surat Diamond industry

Surat : Surat, the world’s largest diamond cutting and polishing hub, has been grappling with a severe recession for over a year. However, there is a glimmer of hope as De Beers CEO, Al Cook, predicted a gradual recovery in the natural diamond market by the end of 2024. Cook made these remarks at the JGW exhibition in Hong Kong, providing some optimism for an industry hard hit by falling demand and geopolitical tensions.

Surat, responsible for cutting and polishing around 90% of the world’s diamonds, has faced significant challenges as global demand for polished diamonds plummeted. Over the past year, polished diamond prices have dropped by nearly 35% due to reduced consumer demand in major markets like the United States and China. These two countries, traditionally strong consumers of diamond jewelry, have seen economic slowdowns, which has negatively impacted the industry in Surat.

The ongoing war between Russia and Ukraine has further destabilized the diamond trade. US sanctions on Russian diamonds have blocked the flow of rough diamonds from Russia’s state-owned mining company, Alrosa, to India. This disruption has directly impacted the Surat industry, which depends on Russian diamonds, especially the smaller stones ideal for Surat’s manufacturing processes. The sanctions have led to a reduction in work and wages for diamond artisans in Surat, with many facing unemployment.

The Diamond Workers Union Gujarat (DWUG) reported that around 50,000 diamond artisans have lost their jobs, and a staggering 60 workers have committed suicide in the past year. The lack of available work due to the ban on Russian diamonds has cast a dark shadow on the livelihoods of small-scale artisans, with wages reduced by nearly half.

Cook’s forecast of recovery later in 2024 offers a sliver of hope amid these troubling times. According to Cook, the market for natural diamonds has seen significant shifts, with lab-grown diamonds experiencing a sharp decline in sales and shrinking profit margins. This change is encouraging retailers to shift their focus back to natural diamonds, which may lead to a gradual revival of Surat’s diamond industry.

Despite the challenges, Cook emphasized De Beers’ efforts to bolster the natural diamond market. The company has ramped up its marketing campaigns to highlight the value and unique appeal of natural diamonds. Cook also noted that De Beers’ long-term investments in technology and sustainability are expected to drive growth in the coming years, which could benefit Surat’s industry by creating more demand for natural diamonds.

However, the impact of global sanctions on Russian diamonds continues to loom large over the market. Cook acknowledged that the sanctions have reshaped the dynamics of the diamond sector, especially in markets like India. To mitigate the impact, De Beers has focused on diversifying its supply chain and investing in alternative sources of rough diamonds, while reinforcing its commitment to sustainability.

The road to recovery may still be long, as De Beers recently reported a 21% drop in revenue for the first half of 2024, totaling $2.2 billion. While the average price per carat remained stable, the decreased sales volume and rising operational costs have weighed on the company’s profitability. Despite these setbacks, Cook remains optimistic about the future, citing the company’s strategic investments as key growth drivers in the next few years.

In Surat, the diamond industry is pinning its hopes on Cook’s prediction and De Beers’ efforts to revive the global market. If demand for natural diamonds begins to rise, it could reverse the fortunes of the industry and bring much-needed relief to the thousands of artisans who have been affected by the economic downturn.

While challenges remain, Surat’s diamond sector remains resilient, adapting to new market conditions and awaiting a potential recovery in the latter half of 2024. Cook’s vision of a stronger, more sustainable diamond market offers a potential lifeline to an industry in need of rejuvenation.