NewsFalling diamond prices prompt Canada to shut down mine

Falling diamond prices prompt Canada to shut down mine

Diamond rings
Diamond rings
Images source: © GETTY | Future Publishing
ed. KKG

7:31 AM EDT, October 28, 2023

Global diamond prices have seen a significant decline, leading the Canadian company, Stornoway, to cease unprofitable extraction in a diamond mine located in northern Quebec. The rise in laboratory-produced diamonds is among the many reasons for this bold decision.

Rising uncertainty in the short to medium-term diamond price, combined with a substantial, sudden drop in global commodity prices, has notably affected Stornoway’s financial stability for the long-term. Contributing to this crisis are factors such as the suspension of raw diamond imports to India and the current global geopolitical climate— details Stornoway Diamonds in a statement concerning the recent mining suspension at the Renard mine.

"Fortune" magazine reported in September that De Beers, a global powerhouse also involved in diamond production, has reduced diamond prices due to the continuous surge in laboratory-created diamond supply.

In some sectors, there has been a decrease by over 40 percent, with a reduction of 15 percent in July alone. As a result, while De Beers charged $1400 for a carat of diamonds intended for further jewelry production in June 2022, the price dropped to just $850 by July. Just five years ago, lab diamonds were cheaper than mined diamonds by 20 percent, but now, they are 80 percent cheaper, says "Fortune".

Stornoway initiated Quebec's first diamond mine and is among the six mines in Canada. Mining activities started in July 2014 with Stornoway's confident assertion that "in a period of steadily rising diamond demand and dwindling extraction, Renard is one of the world's premier diamond mines".

The company secured approximately $703 million USD for financing the venture, bragging that this was the largest project funding for a publicly listed diamond mining entity. It was anticipated that starting from 2016, the Renard mine would provide about 1.6 million carats of diamonds, which equates to 1 percent of the global output, annually for 14 years.

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