Today, we would like to tell you about the scale of the diamond market. We decided to write simple, small and general educational article on this subject.
So, at the moment, the aggregate estimate of the stocks of raw materials needed for the production of adamants (and then diamonds) is approximately 2 billion carats. A little over 130 million carats are mined annually. There are 26 countries – largest producers of diamonds. At the same time, such countries as Australia, Botswana, the Republic of Congo, Russia and South Africa supply most of volume.
As you can see in the picture, Russia is in first place among other countries for diamond mining, having 29% of the market. In this country, almost all diamonds (about 99%) are mined in the Republic of Sakha (Yakutia). There are approximately 10 kimberlite pipes. According to various sources, Russia has the largest number of raw diamond materials in the world.
In the same year, Dominion Diamond Corporation suggested that in the coming years it will be impossible to find new deposits of raw diamond materials, which means that the supply in the diamond market will not increase. Demand, on the contrary, will grow in 2019-2024 due to fundamental processes, such as an increase in the well-being of the middle class in many countries, which undoubtedly should provoke a gradual increase in prices.
Which countries engage in the extraction of raw diamond materials?
The diamond industry is notable for its monopolization. There are very few leading diamond mining and processing corporations. The following companies account for 70% of global diamond production: De Beers, ALROSA, Rio Tinto, Dominion Diamond and Petra Diamonds.
ALROSA occupies 95% of the market in Russia.
Diamonds are also known for their huge black market, which is especially developed in African countries, such as Sierra Leone, Zaire, Angola and others. There is growing criminality in these regions, and the mining and sale of diamonds is the main source of financing for the purchase of weapons.
Where are they processed?
Russia has not succeeded in the processing of raw diamond materials as much as in terms of mining. The margin of this direction at best is no more than 5%, so the leadership is occupied by another country – India, which stores 60% of all produced diamonds in the world.
In Russia, they rely on the processing of large stones from 0.5 carats and more. Although, this domain is not very profitable, still some companies are engaged in this business. They sell more than 60% to Belgium, the USA, China and other countries. 40% are sold domestically.
Where are they for sale?
In this industry, it is customary to sell precious stones at diamond exchanges, which are called clubs. The clubs are concentrated all participants in the transaction- brokers, manufacturers, dealers. Both diamonds and raw diamond materials can be bought or sold there. The greatest activity is manifested in the following countries: Belgium, USA, Israel, South Africa, the Netherlands, Great Britain and Japan.
What is a hub? In fact, this is a certain territory, where all the necessary infrastructure for the provision of services for the purchase/sale of precious stones and industrial production is located. These are the main linkages in the diamond industry. On the territory of these hubs are located diamond exchanges.
For the organization of the hub, several important conditions must be observed:
• This area should be a diamond mining and processing center.
• Historically, this territory is a center of trade and located near major ports.
• There the capital market is developed at a high level.
• The authorities are trying not to interfere with the development of hubs. The tax burden is reduced, as well as customs regimes.
• There is not too expensive labor force in hubs.
In other words, today it’s not so easy to create a hub. A number of factors should contribute to this, including location.
Where leading international hubs are concentrated?
Rightfully, Antwerp can be considered as the center of the diamond industry. There are 4 diamond exchanges. A whole quarter has been allocated for the diamond business in the city- Diamantenzentrum, where more than 1,500 different organizations operate. All of them are indirectly or fully related to the diamond industry. Approximately 84% of all diamonds that are processed and sold in the world pass through this area. Even The CDiamondCoin headquarters is located in Diamantenzentrum. This location opens up a ton of advantages. If Antwerp is the capital of diamonds, then Diamantenzentrum is the very heart of the diamond industry.
Hovenirstrat Street is located in the quarter, it is well known among all diamantaires. Every day more than 8 thousand people trade for a total of $ 140 million there. At the same time, a simple layman is unlikely to be able to get there. This street is closed to inexperienced representatives of the diamond industry. Those who wish to trade in precious stones can access to the street only with relatives help.
Diamonds mined in Russia are mainly sold in Antwerp. ALROSA sells 65% of all the mined stones in this city.
Israel (Ramat Gan)
The Israeli authorities are interested in developing this area in their own country, so there is no tax burden on the export and import of raw diamond materials, as well as diamonds. The territory has its own processing factories, which gives the state advantages in the diamond market.
The main exchange is located in Ramat Gan. It is also a whole area with several skyscrapers, in which a large number of organizations work. Skyscrapers have a network of communications, which is a tunnel. It is generally believed, that the Israeli exchange is the most high-tech.
India has one of the largest diamond exchanges in terms of territory. There are 8 hectares, more than 2,500 outlets, customs services, banks and other market organizations. The state provides tax incentives to diamond companies.
The UAE also has the lion’s share in the global diamond business. There is the Dubai Diamond Exchange, which has developed (like the entire region) at a rapid pace. If back in 2001 the volume of trading on the exchange was $ 5 million per year, now it is $ 39 billion.
Also, the government in 2005 created the SEZ specifically for the development of this domain.
What is the diamond industry like?
There are 29 diamond exchanges, on which the main legal turnover is concentrated. Countries, such as Belgium (Antwerp), Israel, India, Amsterdam, New York, Hong Kong, and Thailand are engaged in processing.
In general, the largest diamond center is precisely Antwerp. Its history goes back more than 500 years. As mentioned above, this is the only one region, where 4 diamond exchanges are located at once: « The Diamond Club of Antwerp », «Diamond Exchange», «Free Diamond Trade Association», «Diamond Ring».
There are a large number of workshops and factories in Antwerp, which are engaged in the processing of diamonds. Due to their convenient location, they facilitate quick communication on supply issues.
So, this is what diamond market looks like today.