Editorial: Are diamonds forever?

We’re hosting our second annual Diamonds in Canada Symposium in June in Toronto at an unlikely time.

In a sector that has seen so much uncertainty in the past decade, investor sentiment towards diamond mining seems to have reached its nadir.

The only question is who is right about the future of diamond mining. Is it the doomsayers, who believe what we’re seeing right now is the death knell of the industry, or is it the optimists, who see the low point we’re in as a contrarian signal that we’ve reached bottom, or alternately, believe that the industry can adapt and survive?

The challenges – including disinterested investors, and consumers who are demanding more transparency and question the mining sector’s environmental impact – are many.

More recently, synthetics or lab-created diamonds have loomed large as a threat to natural diamonds.

So what is the right response?

It’s clear that the cost of exploring for diamonds, evaluating projects and diamond mining have to come down. It’s also a given that the industry at all levels – mining, the mid-stream and downstream retailers – have to embrace transparency.

All of this is actually already happening, if slowly.

“The industry has realized that it needs to tell a better story. It needs to vouch for its product and show that natural diamonds are responsibly sourced and are ethical and have a do-good story to tell,” noted Avi Krawitz, senior analyst with Rapaport in a recent presentation at the annual JCK Jewelry show in Las Vegas.

This isn’t only happening on the retail side.

De Beers Tracr technology, Lucara Diamond’s Clara platform, and the Diamond Producers Association current campaign (page 11) are all examples of miners recognizing how important this is.

On the environmental side, De Beers is working on innovative ways to mine diamonds with a much smaller footprint at its Chidliak project in Nunavut (see Page 17 and our November 2018 coverage).

And the recent discoveries of large diamonds by Lucara Diamond, Petra Diamonds, and others have provided a bright spot for the industry with regard to synthetics.

“If lab-grown is a controversial topic, the antidote is the beautiful large, natural diamonds that come to the market and gain such high, high values,” Krawitz said. “(They) really are a testament to the value that is inherent in a natural diamond.”

The diamond sector will no doubt look radically different in another 10 years’ time.

But, there is reason for optimism.

“If you believe in world GDP growth, then you have to believe in diamonds,” said Lucara CEO Eira Thomas at The Northern Miner’s recent Canadian Mining Symposium in London.

“I’m very optimistic. We’ve got a lot of opportunity in the space right now and we have to get out there and convince a new investor base that this opportunity is one that they should be seizing today.”

It certainly won’t be easy. But the new story of diamonds is already beginning to take shape.

— This article originally appeared in the June 2019 issue of Diamonds in Canada magazine.