Diamond prices rise

The world's largest diamond retailer De Beers has predicted rising prices as production cannot keep up with demand. Based in Johannesburg, De Beers has already raised prices three times this year alone. The $57 billion diamond market saw an increase in sales of diamond rings, necklaces and other jewellery by 10% this year. This prompted De Beers and the London based Rio Tinto Group to step up their efforts in diamond mining and lead mining companies in hot pursuit of the precious stones.

Lynette Hori, a spokesperson for De Beers, said that there was no diamond shortage, only a diamond opportunity. The company told reporters that a 14% increase in prices in the first half had driven up the net income of De Beers by 26% to $341 million.A diamond industry conference is currently taking place in Antwerp, Belgium. Diamond producers, government officials, jewellers and merchants have come together for two days to discuss the industry's future. Projects such as Rio Tinto's Davik mine in Canada may not satisfy growing demand. Global sales are forecast to rise by 50% to $14 billion in 2010, according to James Picton, a consultant for the UK stockbrokerage WH Ireland Group Plc.

Chaim Evan-Zohar, a diamond industry analyst for Tacy Ltd. predicted a diamond shortage around 2007 or 2008. According to Evan-Zohar it is imperative for the industry to find new mines.With the increase in prices comes a drop in net income. The higher prices cause the margins to shrink. This is the experience of jewellers Manhattan-based Tiffany & Co, who saw their third-quarter net income fall by 26%. In this case, increased consumer spending due to a stronger economy is not necessarily an advantage. Large retailers may have to accept the fact that diamonds are a natural product with inherent limitations and can not be produced at will.Currently, the US controls the lion's share of the diamond market with a 55% share, followed by Japan.