While the future of the diamond industry hangs in the balance due to geopolitical tensions, pressure is mounting on the government to act quickly to help keep alluvial diamond producers alive as the war in the Middle East causes diesel prices to soar.
The industry is already facing high input cost pressures, including a 8.76% power tariff hike that came into effect from April 1. The industry is up against rock-bottom prices as demand from its biggest markets — China, the US and Europe — declines. The industry is also taking a hit from Trump’s tariffs and geopolitical tensions.
It also comes as natural diamonds have lost their sparkle to the millennials and Gen Zs who, according to studies, prefer to buy lab-grown diamonds. Unlike their parents, they are likely to purchase synthetic diamond engagement rings that have been described as more friendlier to the environment than natural diamonds.
This adds to complications for South Africa, which has been mining diamonds since the 1870s in Kimberley in the Northern Cape and where resources are being depleted.
The challenges are placing pressure on alluvial diamond industry jobs among operators who mine diamonds close to the surface mainly in the Northern Cape and North West.
The South African Diamond Producers Association (Sadpo) told Business Times that it is in talks with stakeholders to “support the sustainability” of the alluvial diamond sector where thousands of jobs have been shed over the past decade.
According to Sadpo, only 20 companies remain in operation employing 1,000 people, from about 200 operators employing 5,000 in the early 2020s.
It has flagged that the situation is likely to become dire with increases in diesel and power costs.
This should ring alarm bells for a country with one of the world’s highest unemployment rates particularly among the youth. With a job in the mining industry supporting 10 people, it is imperative that action is taken to preserve jobs sooner rather than later.
This could prove to be a difficult task given the headwinds. However, there is a glimmer of hope after diamond producing countries and De Beers signed the Luanda Accord in 2025, which commits 1% of revenue from annual rough diamond sales towards funding the generic marketing of natural diamonds.
While it is still early days, should the push to market natural diamonds gain momentum, there is likely to be a shift in sentiment as natural diamonds create thousands of jobs and uplift economies of producing countries.
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