Stakeholders in the natural diamond industry must react to growing interest and marketing campaigns in synthetic diamonds, the most significant risk to the industry, says James Campbell, CEO of Rockwell Diamonds.
“Do you really want to start your engagement or your wedding on the back of an artificial or a synthetic rather than something that is natural and has been born in the earth’s crust for over three million years? The industry needs to work together to get this right, to make sure that the consumer has that impression and buys according to that impression,” he said.
Presenting an investment case for diamonds at The Junior Indaba, Campbell said rough diamond prices appear to have stabilised but the short-term outlook for the market remains uncertain. “Indications are, however, that the market is cooling as the 2016 volumes are now being processed in factories,” he said, in reference to the volume of rough diamonds sold at auctions since the start of the year.
But the significant emotional value that consumers attach to diamonds offers much promise to miners, financiers and investors. “This industry is very similar to what we have been talking about over the past day and a half. There is geology, there is metallurgy, there is mining and there is funding but there is one fundamental key difference. You can’t use diamonds to build cars, to put into houses, to insert into the latest app, whether it be a Facebook or a Google thing. But is does talk to our deepest emotions of togetherness, passion and love,” he said.
In spite of the current tough trading environment, he pointed to the record breaking sales prices of exceptionally large white diamonds and fancy coloured stones, including the Oppenheimer Blue, as bright spots.
He said India could well replace China as the main new driver of growth in diamonds as it is a “cultural imperative” to purchase diamond engagement and wedding rings in that country. India is currently the third largest consumer of diamonds, after the United States and China. Retail demand is expected to increase on the back of an “explosion” in China’s middle class and sustained growth in the United States.
Over the longer term, Campbell said increased demand, a divergence between supply and consumer demand, expected to manifest in 2020, as well as consolidation in the industry will lead to price growth.