Gem Diamonds Ltd, which operates the Ghaghoo diamond mine in Botswana and the Letseng diamond mine in Lesotho, said it only mined 25.525 carats at Letseng in the final quarter of 2014, down from 28,365 carats in the preceding quarter. The average value of the stones in the fourth quarter was $2,140 per carat. This was down from $2,603 per carat in the third quarter.
“The overall sentiment in both the rough and polished diamond market leading up to and following the Hong Kong Jewelry Show in September was cautious, resulting in downward pressure on the price of rough diamonds during the period,” said Clifford Elphick, CEO of Gem Diamonds, in a trading update. “It is…expected that this cautious approach in the market will continue into the first quarter of 2015.”
Although demand for polished diamonds has improved slightly in January, retailers have larger than expected inventory on hand after a disappointing Christmas season. The demand is still in decline, a trend which started in April 2014, according to the RapNet Diamond Index (RAPI).
Gem Diamonds is not the only mining company to feel the sting of a weak market. Petra Diamonds has said the prices for its wholesale diamonds have fallen eight to nine percent in the last six months of 2014. Production is down by two percent during the half year but it will continue with plans for a payout for shareholders.
“While the rough diamond market may be under short-term pressure,” said John Dippenaar, CEO of Petra Diamonds, in a statement. “Retail demand for diamonds remains solid and the fundamentals for our industry, which are characterized by tight supply and growing demand, are very favorable.”
Due to the fact that mined stones are going for lower prices than in recent memory those savings are being passed all the way to the consumers. Even when buying rocks that are not the standard jewlery pieces like Front Jewelers’ Black Diamonds, consumers are getting better prices than they have in years especially when shopping online to widen their selection.
Although the year-over-year diamond prices are down by almost 10 percent for 1-carat polished diamonds and lesser amounts for smaller stones, retailers are pinning their hopes on a surge in sales during upcoming holidays like the Chinese New Year. Hopes that may not come to fruition with the slowing of Chinese economic growth.
