Diamond Industry To SparklePublished by MAC on 2005-12-24
Diamond industry to sparkle
24th December 2005
MUMBAI: For the Rs 6,600-crore Indian diamond industry, '06 will kick off on quite a cheerful note.The supply of fancy pink and other types of solitaires could increase in '06 in India as Rio Tinto, which supplies close to 20% of rough diamonds to India, has decided to get into underground mining.
This move is expected to help sustain the supply of rough diamonds from the diamond mining company, which was otherwise facing the threat of disruption after '08. Supplies could have been snapped after '08 as the reserves in the existing open mine would have been fairly used up.
The Gems and Jewellery Export Promotion Council (GJEPC) had taken up this issue with the Australian government, considering that the fate of some 2,500 people who are involved in diamond cutting and polishing was at stake in India after '08. Bakul Mehta, chairman, GJEPC told ET that the move by Rio Tinto could fuel further growth and investment in the diamond industry.
The new development will ensure a steady supply of Rio Tinto diamonds for at least the next 12-15 years. "This is a particularly good decision for the East Kimberly Area, the Indian cutting and polishing industry and for the fashion jewellery industry," said Leigh Clifford, chief executive, Rio Tinto.
Rio Tinto has decided to foray into underground mining at its wholly owned Argyle diamond mine in Kimberley, Western Australia. According to reports an additional $150m outlay will be made also for open pit mining activity. This will facilitate continuity of production in case the open-pit mining is shut.
According to Rio Tinto sources, average annual production over the life of the underground mine from '08 to '18 is expected to be close to 60% of Argyle's annual production of 34m carats.
Apart from Rio Tinto, India's requirement of rough diamonds is met by Diamond Trading Corporation (DTC). Some of the popular brands in diamond trade like Nakshatra, Sangini, Arisia and Asmi are owned by DTC which is the sales and marketing arm of De Beers group.
The diamond market in India is now estimated to be $1.4bn or Rs 6,600 crore annually and is expected to top Rs 7,500 crore next year. India has emerged as the fastest growing market in terms of consumption. However, in terms of value, US still leads the pack with a 52% market share, followed by Japan. India and the gulf region approximately consume the same quantity of diamonds.