Thinking Inside and Outside of the Diamond Box

Date: 17 Feb, 2025| By Erez Jacob Rivlin

Diamond Market Analyst, EREZ JACOB RIVLIN’s projections about the diamond market recovery are realistic – but not necessarily comforting.

This article was originally published in Botswana’s Sunday Standard Newspaper.

How long will the current crisis in the global diamond market last? That’s something I’ve been thinking about a lot over the last week. When will we, whose lives depend on the diamond trade, see light at the end of the tunnel? I’ve taken soundings from colleagues, some of whom run the largest firms in the diamond industry. I believe my conclusions are realistic – but not necessarily comforting. It was about week ago that I bumped into a friend walking down the long corridor on the seventh floor of the Antwerp Diamond Exchange building. Kefah Ahmad, a Lebanese living in Antwerp, is the CEO of Sky Diam, a Belgian-based diamond trading and polishing firm known for trading Congolese rough diamonds. A chat with Kefah always gives me a good indication of diamond price trends. Antwerp is situated close to the Dutch border, in the north of Belgium. The Antwerp diamond district is home to hundreds of diamond trading companies, concentrated in 30-odd large buildings, tightly attached to each other without any space even for aneedle between the glued walls. Exchanging trading information in a corridor is part of a diamantaire’s daily routine, and an essential part of the hidden diamond market forces that move prices up and down. His face said it all. It was not just another routine chat about diamond prices. “I just sold all the goods from Kisangani (a diamond mining region in DRC) at a big loss,” he said. “It’s no use waiting. Everybody is offering the same low prices.” He continued with a grim look: “Twenty percent! Can you imagine? I don’t remember such a price drop in small goods. It happened in 2008, during the big financial crisis, but even then, it only lasted for a few months. This time it’s different. I don’t see a price recovery so quickly, so I moved on and I took the loss.”

Kefah is operating in the rough market segment that’s called ‘Outside Goods’ in the trade – diamonds from Angola, South Africa, and DRC (and other diamond producing countries) that account for about 35% of the global market. Most of the diamond market (‘Non-Outside’) are sold by the main market players, namely De Beers, Okavango, and Alrosa, which hold together about 65% of the world market.

Diamond Boxes

The main players sell specialized diamond assortments to manufacturers in ‘Boxes’. Thye command higher prices than the ‘Outside Goods’ because they provide a consistent supply of specific diamond assortments, which makes diamond manufacturing much more efficient. Polished diamonds generated from those ‘Boxes’ have a concentration of similar qualities in comparison with the run-of-mine production. This gives an important advantage to diamond manufacturing firms when they sell their polished diamonds. ‘Outside Goods’, on the other hand, are usually a mixed range of all qualities, practically run-of-mine parcels that include all sizes, colors, clarities, and shapes.

Vicious Cycle

For decades, the relationship between Box prices and Outside Goods prices was just part of the ongoing dynamics of the global rough market. The price advantage of the main players remained, and when the diamond Box price was raised, Outside Goods followed. Falling prices were usually led by Outside Goods. The main players followed, reducing their Box prices, but doing their best to slow the decline. But the current crisis has created a oneway street of price reductions. The largest sellers in the Outside Goods segment are the Angolan mines. They achieved low prices in their tenders, but kept on selling, while keeping their full mines’ production. This diamond-prices-vicious-cycle mechanism drove down the value, for example, of the Catoca run-of-mine production from a little over $200 per carat three years ago to below $80! I continued my tour of the Antwerp diamond district. I went out of the Antwerp Diamond Exchange, turned right, and walked about 50 meters to the Arslanian building. I entered the offices of Vitraag, a global polishing diamond firm, with a presence in Europe, USA, and Asia. My discussion with Rajiv Rakyan, its founder and CEO, only reinforced my view on the market. “We are participating in most tenders,” Rajiv said, “and we are witnessing an unfair situation. Some companies are making a major effort to defend the diamond industry, and some companies are acting as if everything is just fine. To support the crisis in the diamond market, De Beers is cutting its production by millions of carats. This obviously, is hurting the Botswanan economy tremendously. But in Angola, Endiama opened a new mine last year, and has kept all its mines at full production. This is not only unfair. It is against the interests of the Angolan miners themselves.”