The global diamond industry is suffering the same economic downturn as the rest of the world. Consumers who may be out of work or watching their investments shrink are in no mood to buy luxury goods. The result is falling diamond prices as demand shrinks.
Diamond prices have been under pressure for over a year. One Canadian producer has already bit the dust. Tahera Diamond Corp. closed its Jericho mine in Nunavut and filed for protection under the Companies’ Creditors Arrangement Act in January 2008. Its assets are for sale.
Even the largest diamond producer is feeling the pinch. Word has reached us from Diamond World Magazine of Mumbai, India, that De Beers Canada plans to suspend operations at its Snap Lake mine in the Northwest Territories for a total of 10 weeks this year. This is on top of the 105 contract workers that were laid off in November 2008. Remaining employees will be asked to take vacations or accept salary adjustments to cover a six-week closure this summer and a further four-week closure at the end of this year.
De Beers January sales of rough diamonds to selected customers was at a 25-year low. The January 2008 sales garnered $650 million, but this year’s offering drew only an estimated $80 million to $150 million. The drop is a reflection of the depth of economic woes in the United States, where consumers purchase 50% of the world’s diamonds.
I’ll do my part to support the diamond industry. I’m saving towards the purchase of a Canadian diamond. Too bad the federal budget didn’t offer a tax credit for buying Canadian luxury goods.