The traditional diamond industry based on earth mined diamonds seems to be racing on a rough terrain. It is combating several obstacles on socio-economic and environmental front.
De Beers’ drops Victor mine expansion and does not increase exploration budget
The Victor mine in Canada, owned by De Beers, produces 600,000 carats of diamonds in a year but it is scheduled to close in early 2019. Attempts of the company to work on Tango deposit closer to Victor to increase the project life by 5-6 years failed because of lack of support from neighboring aboriginal community. Formal support from First Nation of Attawapiskat was required to extend this project, which the company failed to get due to controversial relationship with the community. Mining is blamed for community’s economical and environmental issues. Apart from Victor, Gahcho Kue is the only mine De Beers has in Canada. Moreover, in 2017, De Beers has refrained to increase its exploration budget and has kept it steady at USD 35 million. This amount is insignificant compared to the USD 7 billion combined exploration spend by the industry between 2000 and 2013.
After failing to start Bunder project, Rio Tinto hands over the mine to government
Rio Tinto is handing over its ambitious Bunder diamond project in India to the state government due to commercial and environmental considerations. The controversial Bunder diamond mining project fell in an eco-sensitive area that is home to several tigers and wildlife species. After protests and questions from wildlife enthusiasts, India’s Forest Advisory Committee (FAC) had deferred environmental clearance of the proposed project. After years of failure to start the project, Rio Tinto has finally given up and handed over the mine to government. With this development, BDI’s earlier analysis of Rio Tinto actually getting out of diamond mining seems to get corroborated.
Diamond trade hit
Economic slowdown in India and China led to dip in Belgium’s polished diamond trade, according to Antwerp World Diamond Centre (AWDC). AWDC’s numbers say that imports of diamonds fell by 10% to USD 11.39 billion and exports of polished diamonds by the same margin to USD 11.8 billion.
It said, “India’s demonetization in early November had an immediate impact on trade with India, but slow economic growth in the BRIC countries is at the heart of this issue”.
Besides, global jewelry demand also failed to sparkle in 2016.
Tiffany’s CEO steps down
The bumpy ride of diamond industry led to exits of top executives as well. Due to Tiffany & Co.’s financial performance issues, its CEO – Frederic Cumenal, who was appointed in April 2015, stepped down. Tiffany’s board said that it was disappointed by the recent financial results. The interim will be served by the chairman of the board of directors and former CEO Michael Kolwaski. In hope to arrest declining sales, Tiffany hired Lady Gaga for Superbowl ads.
US advisor on conflict diamonds leaves agency
U.S. Department of State’s special advisor for conflict diamonds Ashley Orbach is leaving the agency and her role which she performed for three years. It is said that it will only add to the uncertainty in US’ s stand in Kimberley process and human rights in the mining industry.