Demonetisation will haunt diamond demand in 2017: De Beers

De Beers cut diamond production by 5% to 27.3 mn carats in 2016

De Beers, one of the world's top diamond mining groups, said on Tuesday that the demonetisation drive in India along with other factors in US and China will haunt the diamond market in 2017.

According to the mining giant's annual results for the year 2016, which was declared on Tuesday, De Beers has cut its production by 5 per cent to 27.3 million carats. Moreover, prices of rough diamond decreased by an average of 10 per cent to $187 per carat.

Despite a challenging global environment,  the company's sales and profit registered a sharp increase with its total revenue increasing by 30 per cent to $6.1 billion. This was attributed to a higher sale of rough diamond that increased by 37 per cent to $5.6 billion.

After declaring its 2016 results, De Beers said: "Growth in demand for diamond jewellery was sustained in 2016 in the larger market but In India, a month-long jewellers' strike in March and the government's surprise demonetisation programme in November had a considerable negative impact on the demand."

Hoping that the industry will stabilise soon, the company expressed concerns regarding the US being the main driver of demand for diamonds.

"Growth is dependent upon a number of macroeconomic factors, including the new administration in the US and the strengthening of the US dollar that could impact consumer demand, Other factors include economic performance in China, effects of demonetisation in India, and market sentiments following the US and Chinese New Year retail season," said the company.

It added that while producers continue to de-stock and sell inventories, diamond production is expected to be range between 31 to 33 million carats in 2017.