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Diamond Supply Pressures Could Benefit Public Mining Companies

Natural Resources
0 min read

Image Credit: Kim Alaniz (Flickr)


Will Reduced Diamond Production in Europe Bode Well for Producers Elsewhere?

They say that if the economy is faltering that you should invest in hard assets, or companies that produce them. Hard asset investing can include commodities like gold, silver, and platinum with value extending to equities of producers of these durable metals. It may also include collectibles like fine art and diamonds and other gemstones. In the case of diamonds, the axiom extends to producers (mining companies) as well.

Diamond Supply Side Down

Demand for diamonds did not dip during the pandemic, sales just moved from brick and mortar to online purchases. So the pace remained consistent, which is usuall at about the same pace they are consumed. Diamonds are scarce, so by definition, supply is typically tight. But, the recent Russia/Ukraine issues have had an impact since 30-35% of the worlds diamonds that once were sold out of Russia are off now limits. 


Diamond Price Index (DPI) provided by diamondse.info, June 2009 – May 2022

Taking up the Slack

With demand remaining consistent at 130 million carats per year and supply being significantly pinched, those able to supply diamonds stand to fare much better than other years since the unmet need for diamonds from non-conflict areas is likely to be much stronger as a result.

When people in North America think of diamond mining, they usually think of South Africa, not Europe. The impact of what is going on in Europe is not interrupting operations in South Africa’s ability to add new diamonds to market.

One junior diamond mining company which has a well-established prior operational and production history in South Africa, extensive prior experience supplying rough diamonds to the world market, and a long-established alliance with Tiffany & Co., DeBeers, and others is Diamcor Mining Inc. (DMIFF,
DMI:CA
).

Diamcor’s focus is on idetification, acquisition, and operation of diamond projects with near term production potential. This allows this company to avoid the high risks and costs associated with traditional exploration.

In a video from the recent NobleCon18, Dean Taylor, CEO of Diamcor Mining discussed that his company is production-focused, bringing supply of raw diamonds to sellers. In addition to having a strategic alliance with Tiffany’s the retailer is also a shareholder of the company.

To gain deeper understanding of the supply factors impacting world diamond production and partnerships, as well as Diamcor’s business specifically and value, watch the video here

Take-Away

As we have seen with other industries that impact our everyday life at the grocery store, gas stations, and elsewhere, geopolitical events have an effect on prices and company earnings. Diamonds and gemstones are not what is being discussed when we chat over the fence with our neighbors, but this may mean that the opportunities have not yet been recognized by the investing masses.

Paul Hoffman

Managing Editor, Channelchek

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Diamcor Mining (DMIFF) NobleCon18 Presentation Replay

Sources

https://www.aljazeera.com/economy/2022/5/9/angolas-endiama-says-sanctions-against-russia-could-hurt-its-diamond-operations

http://www.diamcormining.com/investors/diamond-information/

https://www.diamondse.info/diamonds-price-index.asp

 

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