As 2011 draws to a close, diamond companies and diamond mines around the world are in flux and seeing strategic shifts in the face of emerging market activity.

Many of the world’s diamond mines are in decline and no major sites have been discovered in the past twenty years. As a result, the global diamond industry has seen myriad changes. Petra Diamonds has predicted that demand for diamonds will far outpace production in the coming years, primarily as a result of an expanding middle class populations in India and China. And China and India are expected to account for about a third of the world’s diamond demand by 2020. The behavior of the industry as a whole seems to be anticipating this trend.

Diamond Industry and Buyouts, Public Offerings, and Status Changes

One of the biggest news items in the diamond industry is the Anglo American buyout of the Oppenheimer’s stake in De Beers for spent $5.1 billion, thus ending the Oppenheimers' 80+ year reign of De Beers.

Big names in the diamond and jewelry sector are on the road to major expansion or strategic shifts. BHP Billiton is planning on selling all or part of its diamond assets, including the Ekati mine in Canada. Other diamond mining companies are on the expansion track. Chow Tai Fook Jewellery Group Ltd of Hong Kong is planning on raising almost $3 billion. Graff Diamonds of London had adopted an aggressive expansion strategy and plans on raising about $1 billion in a Hong Kong listing.

Tiffany & Co and Swatch are both aiming to secure their rough diamond supplies and want to be closer to the source. The Tache Group and mining company Shear Diamonds Ltd. have recently formed a strategic alliance for acquiring diamonds. Tache is aiming to acquire diamonds from Shear Diamond's Jericho diamond project in Canada, and plans on offering Shear a financing facility.

Investment in Diamonds

According to industry reports, diamonds have not yet acquired the investment appeal of gold, because of difficulties with valuation, the lack of liquidity, and the absence of a spot market. 

 

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