Breakfast without diamonds: the world’s largest producer accumulates reserves not seen since the 2008 financial crisis

At the rate the market is going, Audrey Hepburn is going to star Breakfast without diamonds. The sale of these jewels considered the pinnacle of luxury has faltered again and has led De Beers, the world’s leading diamond producer, to accumulate its largest reserve since the 2008 financial crisis.

Plummeting Chinese demand, competition from lab-grown alternatives, which cost about one-twentieth of a natural stone, and the legacy of pandemic lockdowns, when marriage numbers plunged, have left the Luxembourg firm with an inventory valued at around $2 billion. “It has been a bad year for sales of rough diamonds,” the executive director has assured. FT.

The prolonged drop in demand that began with the coronavirus pandemic has forced De Beers to take measures to curb the supply of gemstones. In particular, it has reduced production from its mines by 20% from last year’s levels and reduced prices at its most recent auction this month. Auctions are used to sell rough, or uncut, diamonds to a group of around 50 certified buyers known as sightholderswhich are the most powerful distributors in the industry.

With a template of 20,000 peopleDe Beers has been a dominant force in the $80 billion diamond jewelry market since its founding in the late 19th century. The group’s revenue fell to $2.2 billion in the first half of this year, compared to $2.8 billion in the same period of 2023.

The crisis of these precious jewels affects the entire sector. Its biggest rival, Russia’s Alrosa, was hit by sanctions imposed on Russian diamonds by G7 nations this year following the large-scale invasion of Ukraine in 2022.

Paul Zimnisky, an independent industry analyst, estimates that De Beers’ rough diamond sales were on track to decline by about 20% this year, after falling 30% in 2023.”Given the low starting point, any recovery in trade should result in relative growth in 2025,” he says, adding that he expected global diamond jewelry sales to increase by about 6% next year.

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