Annual Report and Accounts 2013
Petra Diamonds Limited 17
Overview
Performance Review
Strategic Review
Sustainability
Corporate Governance
Group Accounts
The success rate for finding an economic, diamond-
bearing kimberlite is estimated to be around 1%.
Source: De Beers, Nomura research
Diamond deposits are scarce
A key characteristic of diamond deposits is their scarcity,
in contrast to many other commodities, with only around
30 significant kimberlite mines operating in the world today.
To date, the most important discoveries (other than Argyle
in Australia) have clustered into three regions of the world:
southern Africa, Siberia and western Canada.
Profitable, large-scale kimberlites are therefore difficult to find
and can take a long time to bring into production (up to 10–15
years from discovery). Despite the large amount of money
invested into diamond exploration in the last few decades,
there have been no major new discoveries for around 20 years.
Petra’s growth strategy has therefore been to acquire existing
mines, where the opportunity exists to invest in and optimise
these assets in order to extend their lives.
Supply is limited...
Many of the world’s largest diamond mines are now past their
peak production levels and some are currently undergoing an
open-pit to underground transition, which inherently limits
tonnage output. Furthermore, some of the world’s major
diamond mines are expected to come to the end of their
useful lives within the next ten years.
Whilst certain new mines are planned to come on stream,
there is nothing of significant size to make up for this
downward trend in production.
...whilst demand is growing
Demand growth for diamonds is being driven by the
urbanisation trend and the growing middle classes in emerging
markets, with an additional 1.3 billion people forecast to attain
middle income status by 2030 and a further 2.6 billion by 2050
(HSBC ‘Consumer in 2050’ report).
Demand is shifting from west to east, as the Far East (classified
as Japan, China, Hong Kong, Taiwan, India and the Gulf) rapidly
develops consumer preferences for diamonds.
However, unlike most other commodities, diamonds also provide
exposure to the economic recovery ongoing in the US, which
remains the world’s dominant diamond consumer.
Supply and demand
The Far East is expected to account for
approximately half of global demand by 2017.
It is possible that the world has already seen
peak diamond production.
2010
2004
2006
2012
2008
GLOBAL DIAMOND PRODUCTION
Million carats
Source: Kimberley Process Statistics
DIAMOND JEWELLERY SALES MARKETS
Source: RBC Capital Markets/De Beers
USA
Far East
Rest of World
Note: 2017 figures
are estimated
26
%
26
%
48
%
2000
34
%
50
%
16
%
2017
200
100
0
50
150
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