The global diamond market is defined by the production and sales of rough diamonds. Rough diamonds are produced from 25 countries - an exclusive group dominated by African countries - although 93 percent of global diamond production is concentrated in just seven countries: Russia, Botswana, the Democratic Republic of Congo (DRC), Australia, Canada, South Africa, Angola, Zimbabwe, and Namibia.
Botswana and Russia are the two largest producers; between them they have about half of the world’s production. Australia, Angola, Namibia and Canada make up most of the rest. In fact, four control about 65 percent of the market: De Beers, Russian producer Alrosa, and diversified mining companies BHP Billiton and Rio Tinto. De Beers alone controls about 35 percent of the market, with Alrosa about 20 percent.
Today, there are only about 20 major diamond mines in the world. And the big supply is even rarer — only 11 mines make up 62 percent of the world’s production of diamonds by carat! And they’re getting even rarer. The last major diamond mine was discovered in Zimbabwe in 1997. No matter how big the mine is, you’ve got to move a lot of rock to get at a very small number of diamonds.
Production varies by mine, but the world’s “richest” mine — the Jwaneng mine in Botswana — has to move a ton of rock to get 1.4 carats of rough diamond, on average. That mine moves 8 million tons of rock a year and sells the rough diamonds for an average of $134 a carat. That’s $1.5 billion in revenues, from a single mine. And it produces profit margins of 24 percent.
The producers then sell their rough diamonds to intermediaries who cut and polish the diamonds. It’s a costly process: most rough diamonds lose 50 to 60 percent of their weight going to polished form because material is cut or polished away.
Rough diamonds are classified according to one of three categories based on quality: gem quality, near-gem quality, and industrial quality. Of the 133 million carats produced, only half went toward jewelry. The rest went to lower-end industrial production, where diamonds are used for cutting, drilling and polishing, and they are especially popular in the mining industry and in the military.
Very small diamond particles are embedded into saw blades, drill bits and grinding wheels to increase their ability to cut tough materials. Diamond powder, made into a diamond paste, is used for polishing or for very fine grinding. But they are the smallest, lowest value stones. The majority of diamonds for industrial use are now synthetically made.
Are Diamonds Really Rare?
Diamonds are the hardest material found on earth. They resist scratching better than anything else. Other than that, they hold no unique distinctions. All gem-quality materials are rare. They compose just a tiny fraction of the Earth. However, diamonds actually number among the most common gems. Scientists believe that a quadrillion tons of diamonds lie deep beneath the surface of the earth. That’s not rare at all. However, we cannot reach these quadrillions of diamonds.
Because only a very small amount of these millions of carats are fit for jewelry. Only a tiny percentage is good enough to end up in the ring on your finger. Or in the necklace you have your eye on. These high-quality diamonds are rare.
Besides the fact that high-quality diamonds are valuable because they are rare, there is more. High-end craftsmanship also plays a huge role. Polished diamonds are worth way more than rough diamonds. So you don’t pay for the material (carbon) only, but for the craftsmanship as well. It may come as no surprise that good craftsmanship is more expensive than bad polishing work. Therefore, the cut of a diamond also influences the price a lot.