For years, communities throughout the African continent were exploited for diamonds. The term “blood diamond” was coined because of the gruesome conditions that people and animals suffered in the name of profit. Even though human rights organisations have made progress in recent years in curbing exploitation, the problem has by no means been solved, and illegal diamond trading continues to be a growing concern. This has resulted in a massive dip in diamond sales as more and more consumers are insisting on responsibly sourced stones.
Consumer confidence in the diamond industry has not only been tainted by its reputation. The rise of e-commerce has given diamond jewelry buyers unlimited options, thus forcing producers to diversify production in order to satisfy rapidly evolving taste and placing further strain on them. What’s more, protests in Hong Kong in recent months have dried up a vital diamond market, and the synthetic diamond revolution is in full swing. Consumers are becoming increasingly conscious of the moral and environmental stigma attached to traditional mining. Artificially made diamonds have few ethical strings attached to them.
According to experts, the diamond market has been idling since around 2014 whereas the artificial diamond market showed growth of approximately 20% last year. In fact, there was a decline of 2% in diamond sales in 2019, as reported by the Global Diamond Report, despite higher than average production rates. Although 2% may sound like a nominal dip, it can take a hefty toll economically. It was expected to rise again in 2020, but then the unprecedented global Covid-19 health pandemic dashed any chance of that.
The arrival of coronavirus in late 2019 has effectively stopped the world from functioning as we know it. Much of it is currently on lockdown with no clear indication of when it will end or how soon life will return to normal, if ever. This great level of uncertainty is forcing consumers to think twice about how to spend their money. With the Covid-19 crisis compounding the challenges of an industry already on its knees, are diamonds still forever?
The good news is that, despite global uncertainty, diamond companies are still showing confidence in future demand. After all, the industry has been through so much and has always emerged stronger. Anglo American recently announced that, even with significantly reduced staff, production will continue across Africa. The company has retained around 50% of staff at various mines that are continuing limited operations. They have also kept some supporting infrastructure such as railway lines and ports in place to support exports. These dynamic actions may be in response to a potential increase in demand from China as they are slowly recovering. Is this a good sign for the diamond industry? Only time will tell.