b'THE STATE OF RETAIL DIAMONDSJEWELRYCOLORED DESIGN STONESWe arent necessarily out of natural diamonds, industry analyst PaulFew people realized it then, but this novel coronavirus would shut Zimnisky says. Were out of economic deposits at current prices. down the entire worldsome diamond mines includedand domi-Adding another element of uncertainty is the future of Russian sup- nate the headlines for the next two years.ply, with (as of press time) one of the worlds biggest producers, Alrosa, 200 PRESSURE effectively barred from doing business in one of the worlds biggest diamond markets, the United States.De Beers declined to provide comment for this story, noting it would be inappropriate to discuss specifics about future diamond production. HEAT 150 But in a May 2020 interview with National Jeweler, De Beers CEO Global diamond supply figures maintained by the Kimberley Pro- Bruce Cleaver did speak a bit about the difficulties involved in clos-cess (KP), which date back to 2004, show production peaked in theing diamond mines, which he described as complicated ecosystems. early aughts, climbing to 176.7 million carats in 2005.100 In deciding which mines to close and for how long, De Beers had It stayed above 160 million carats in 2007 and 2008 before drop- to work out a difficult equation, Cleaver explainedhow to keep ping off by more than 25 percent in 2009 (120.2 million carats) inits workers and the communities that surround its mines safe and response to the global economic crisis.healthy while not cutting off their sole source of income by shutting 50 down the operations that support them. Olya Linde, a partner with Bain and Co.s Energy & Natural Resources practice and one of the authors of the companys global diamond report for 2020-2021, said prior to the 2008 crisis, theCHARTING DIAMOND PRODUCTION OVER THE LAST DECADEindustry had expectations of strong growth.0 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020There was a new middle class coming up in China and India, as well as other Asian coun-tries, that diamond companies were eager and200hopeful to capture as their next consumers, bringing growth the industry believed it could not cultivate in the already-mature U.S. market.150These high hopes resulted in lots of proj-151 million 148.4 million Millions of Carats 128 million129.8 million 125.4 million128.3 million126.4 million138.1 millionects in the pipeline, Linde says, but those proj-ects were put on ice when diamond demand100122.8 millionand prices softened during the 2008 crisis. 107.3 million As the world recovered, the industry benefit-ted from what Zimnisky describes as a boom in diamond buying by Chinese consumers. The50surge pushed diamond prices to historic levels in 2011 and rallied investor support for projects that had been paused during the downturn.0In 2016 and 2017, three new large commer- 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020cial diamond mines came online. The largest of these was the Gahcho KuSource: Kimberley Process mine in Canadas Northwest Territories, a joint venture between De Beers Canada and Mountain Province Diamonds.It was a problem diamond miners worldwide grappled with The mine was forecast to produce 4.5 million carats per year but, ac- throughout 2020, with production dropping 22 percent year-over-year cording to De Beers, surpassed 5 million carats in its first 10 months ofto a historic low of 107.3 million carats, according to KP statistics. operation in 2017.The biggest decreases came from Russia, Canada, Botswana and There was also the Renard mine in Qubec, operated by Storno- Australia, Bain noted in its report. way Diamonds, and the Liqhobong Diamond Mine in Lesotho, op- According to Bain, Alrosa lowered production at Botuobinskaya, erated by Firestone Diamonds (75 percent interest) and the LesothoAlmazy, Anabara and Jubilee, as well as a number of smaller mines. government (25 percent).(Alrosa did not provide comment for this story in light of Russias These new mines contributed to diamond production reachingFeb. 24 invasion of Ukraine. For more on how the ongoing conflict in 150.9 million carats in 2017a level not seen since 2008, KP statisticsUkraine could impact global diamond supply, see box on page 55.) showand 148.4 million carats in 2018.In BotswanaDe Beers largest source of diamonds by farpro-Production dropped off to 138.1 million carats the following year, aduction plunged 29 percent for the year, the companys year-end 2020 7 percent decline but still well above the industrys range of produc- figures show.tion from 2011 to 2016.Canadas output took a hit from the temporary suspension of Toward the end of 2019, however, news began to surface about aoperations at two mines there, Renard and Ekati, which reopened cluster of patients in Wuhan, China suffering from an unknown illnessunder new ownership after former owner Dominion Diamond Mines that caused their temperature to spike and left them short of breath.declared itself insolvent. Continued on page 5452 STATE OF THE MAJORS 2022'