The global natural diamond industry is facing one of its toughest downturns in decades as demand continues to weaken while laboratory-grown diamonds rapidly gain popularity. Responding to the prolonged market slowdown, De Beers, the world's largest diamond producer, has decided to suspend production for two years at its Venetia mine in South Africa, despite investing approximately 2.2 billion dollars in its underground expansion.
The Venetia mine contributes nearly 40 percent of South Africa's diamond production and around 10 percent of De Beers' global output. Although the underground project was developed to access deeper diamond reserves after the open-pit mine reached its limits, falling consumer demand and oversupply have forced the company to delay further extraction.
Industry experts believe the temporary shutdown is intended to reduce supply, stabilise prices, and control operating costs. Around 4,000 workers associated with the mine now face uncertainty over their future employment.
The decline in natural diamond sales has been accelerated by the rapid rise of lab-grown diamonds, which are visually and chemically almost identical to mined diamonds but cost nearly 65 percent less. Consumers are increasingly choosing these affordable alternatives, particularly for jewellery.
China, one of the world's largest diamond jewellery markets, has also witnessed weaker demand as households reduce luxury spending and shift towards gold as a safer investment. India has been affected as well, with Surat's diamond cutting and polishing industry experiencing falling exports and reduced employment.
As market conditions remain challenging, De Beers and its parent company, Anglo American, are focusing on cost reduction while preparing the mine for future production when global demand eventually recovers.
