SAFELY

Background

The diamond industry was in decline even before Covid-19. In India, for example, where the vast majority of stones are cut and polished, many manufacturers were already operating under an impossible margin band ranging between -7% to -1%, meaning they lost money on every diamond sold. In 2019, global diamond jewelry sales had already dropped by up to 5%, according to Bain’s, while mining and midstream revenues had shrunk by 25% and 10%, respectively.

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While sector conversations are primarily centered on recovery, we must also address the underlying issues that have hampered progress in recent years. For too long, the narrative has been about efficiency : how to make supply chains bigger, better, faster and cheaper. The industry lost sight of the collective benefits of sustainable value chains, not least in reducing both reputational and fiscal risk. Diamond manufacturers add significant value to a diamond, despite the low aggregated cost they bring to the trade and must therefore assume most, if not all of the accountability end-customers are now demanding.

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Notably, customers who love diamond jewelry want to know their purchase has been sustainably and ethically sourced. In the post-pandemic market, these conscious consumers will increasingly call the shots. With prices so low, auditability is becoming a source of added value – and a bargaining chip. Those businesses with the desire and ability to meet the provenance challenge will be better placed to shake off the rigours of the pandemic, and then prosper in the long-term.