Diamond cutting centers may see a shortage of small, cheaper diamonds next year if the demand for polished diamonds continues to grow as expected. According to the Financial Times, the shortage could be a result of large diamond producers decreasing their diamond stockpiles and mines slowing production.
De Beers, the largest supplier of rough diamonds, has already sold $1.2 billion of its diamond stockpile, leaving it reserves worth $2.7 billion as of June. The company has also said its stockpile of small cheap diamonds is exhausted. Argyle, the Australian mine that produces cheaper gems, has cut production this year in an effort to restructure and increase output in the long run. Output isn't expected to increase until 2002. In addition, diamond output from Angola is still questionable, Russia is producing at full capacity now, and mines in Canada aren't expected to open for another two years.
Mining analysts are concerned that if the U.S. economy continues to grow in the second half of 2001, there will likely be a shortage of at least the small, cheaper diamonds, the Financial Times reports. A shortage would likely cause diamond prices to increase.
- by Julia M. Duncan