For decades, De Beers orchestrated an exclusive network where raw diamonds exchanged hands in secret, invitation-only meetings summits that underpinned the company’s legendary market control. However, these gatherings, once a symbol of power and profitability, are now in disarray. The prolonged downturn in the diamond market has left De Beers scrambling for answers as its elite group of buyers, known as the Principles, increasingly forgo these high-stakes events. With prices stubbornly high even as the market plummets, many longstanding customers have grown frustrated and alienated.
Market Disruption and Falling Demand
The crisis in the diamond industry is multifaceted. A steep decline in demand from China the second-largest market has slashed sales by nearly 50% since the pandemic, while the influx of lab-grown diamonds is flooding the market with cheaper alternatives. These synthetic gems, indistinguishable from natural stones in terms of composition and appearance, have eroded the value proposition of mined diamonds, particularly in fashion jewellery and lower-end engagement rings. The resultant drop in rough diamond prices up to 50% in two years has sent shockwaves through the industry, leaving retailers and miners struggling to recalibrate.
Strained Relationships and Price Wars
Traditionally, De Beers not only controlled supply but also set the price, providing its customers with built-in profit margins. However, recent events have undermined this longstanding relationship. After months of refusal to lower its prices, De Beers eventually made a modest 10-15% cut in December 2024 an action deemed too little, too late by many of its buyers. The fallout has been swift: customers, frustrated by pricing that remains significantly above secondary market rates, have begun to withdraw from De Beers’ exclusive conclaves, further destabilizing the company’s influence.
Complicating Anglo American’s Exit
Adding to the uncertainty is the strategic dilemma faced by Anglo American, De Beers’ owner. With its ambitious plans to exit the diamond business and focus on other mining ventures like copper and iron ore, Anglo American now finds itself in a precarious position. The ongoing crisis is depressing diamond prices and eroding buyer confidence, making it increasingly challenging to secure a favorable sale. Investors are watching closely as Anglo American attempts to salvage the “trophy” asset while mitigating further losses.
A Pivotal Moment for the Industry
The current crisis at De Beers is emblematic of broader upheavals in the global diamond market. From unsold stocks being returned by Chinese retailers to closing factories in India and political shifts in Botswana, the industry is grappling with unprecedented challenges. While some industry insiders hold out hope that the collapse in lab-grown diamond prices might eventually bolster the allure of natural stones as a luxury, the overall outlook remains deeply uncertain. As the crisis deepens, the diamond industry faces the daunting task of recalibrating a model that has remained largely unchanged for over a century.
In this pivotal moment, De Beers’ struggle not only threatens its own storied legacy but also casts a long shadow over an entire industry valued at €80 billion a reminder that even the most entrenched market leaders are not immune to seismic shifts in global demand and technological innovation.
