Namibian diamond industry will survive pressure from synthetic diamonds

The Namibia Diamond Trading Company (NDTC) says the country’s diamond production industry can withstand the threat posed by synthetic diamonds.

NDTC says they have shifted their marketing strategy to capture Gen-Z and millenials in an attempt to boost sales of natural diamonds.

Speaking to Desert Radio on Tuesday, NDTC chief executive officer Brent Eiseb said Namibia will continue to satisfy key traditional diamond markets, including the United States, India and China.

He said efforts to reposition natural diamonds globally include partnerships with major retailers in these countries, as well as marketing campaigns tailored to younger consumers.

“We’ve shifted our messaging to address sustainability, a major concern for millennials and Gen Z. Through blockchain technology, consumers can now trace the origins of their diamonds, including the environmental and social impacts of their production,” said Eiseb.

The diamond industry has faced many challenges locally and globally, some of which come from the rise of synthetic diamonds.

The Bank of Namibia’s quarterly report showed that ongoing struggles within the diamond mining sector could extend beyond 2024, potentially stalling the country’s economic growth.

According to the report, there has been a reduction in production volumes and a decline in international diamond prices.

Eiseb said although the industry has been hit before, the current challenges are unprecedented.

“The diamond industry has weathered downturns before, but what we are experiencing now is unprecedented. Unlike the typical ‘V-shaped’ recoveries of the past, this is more of a ‘U-shaped’ situation, with prolonged market challenges,” he said.

According to Eiseb, there has been a significant decline in consumer demand in key markets like China, which has struggled to regain its pre-pandemic economic momentum.

“Additionally, lab-grown diamonds have surged in popularity, particularly in the US market, and global inventory levels have ballooned, causing further strain,” said Eiseb.

Namibia’s diamond industry contributes 8 to 9% to the gross domestic product (GDP) annually, within a mining sector that accounts for up to 13% of GDP.

However, production has declined by 14% this year.

Eiseb emphasised the importance of long-term strategies to sustain the industry amid current struggles.

However, even with the rise of lab grown diamonds, natural diamonds will still be a preference for many.

“We acknowledge the rise of lab-grown diamonds, and it’s clear they are here to stay, but natural diamonds still hold a unique place in the market, especially for special occasions like weddings and anniversaries,” said Eiseb.

He added that the company is focusing on creating a clear distinction between natural and synthetic diamonds.

Previously, lab-grown diamonds were priced at a 10% discount compared to natural diamonds, however, they now sell for up to 90% less.

This shows an oversupply in the market.

Eiseb said the industry will have a better picture of performance after the diamond-buying season, which runs from November through Valentine’s Day, and typically accounts for 60% of annual diamond jewelry sales.

“This season will be pivotal. If our strategies pay off, we could see a turnaround in consumer demand and confidence,” said Eiseb.

He said in light of the challenges, there are collaborative efforts between the private sector and the government through partnerships like Namdeb and De Beers Marine Namibia.

“Namibia’s joint venture model is one of the most successful public-private partnerships in the world,” he said.

“The industry will not only survive but thrive. These are extraordinary times, but we’re taking the right steps to secure a bright future. The diamond will shine.”