The miner of Karowe Diamond Mine in Letlhakane is optimistic about long-term growth prospects of the natural diamond market, despite headwinds posed by pockets of market penetration by synthetic diamond.
In its Financial Statements for the Quarter Ended March 31, 2024, Lucara Diamond Mine, which owns Karowe Mine in central Botswana pointed out that synthetic diamonds continue to carve out a significant market share. The Canadian mining junior said the combination of reduced supply from ageing mines, strategic production cuts by De Beers and the impact of G7 sanctions on trade are positioning the natural diamond market for sustained growth.
“The long-term outlook for natural diamond prices remains positive, anchored on improving fundamentals around supply and demand as many of the world’s largest mines reach their end of life,” the miner projected.
The Canadian diamond mining junior however signaled some trade delays in March caused by a new and centralised diamond validation requirement by the G7 nations as they try to enforce sanctions on the importation of Russian diamonds greater than one carat. The delays are expected to temporarily restrict the availability of higher-value diamonds, providing short-term support for diamond prices.
“The company sees this as short-term support for diamond pricing as this, together with the reduction in production volumes from De Beers, will result in lower volumes of higher value goods being available in the market,” the miner projected.
While the sale of lab-grown diamonds has been steadily increasing in 2023 and into Q1 2024 with many smaller retail outlets increasingly adopting these diamonds as a product, a significant shift occurred in the same quarter with Lucara noting that several major brands confirmed that they would not market lab-grown stone. According to the miner, this trend is expected to create a clearer market distinction between natural and lab-grown diamonds.
“The overall long-term impact will support the natural diamond market as the company expects a division between the natural and lab-grown diamond market,” Lucara stated.
Karowe, which has been in production since 2012 is the focus of its operations and development activities and it’s large, high-value diamonds have historically accounted for approximately 60 percent to 70 percent of Lucara’s annual revenues.
During Q1 2024, a total of 93,560 carats of rough diamonds (Q1 2023: 83,374) from Karowe were sold through the company’s three sales channels, generating revenue of $36.2 million before top-up payments of $4.9 million (Q1 2023: $34.7 million before top-up payments of $6.6 million).
Karowe diamonds are sold through three sales channels: through the HB sales agreement, on the Clara digital sales platform and through quarterly tenders.
