Proof that diamonds are getting harder to find can be seen in the South African bush, where one of the world's largest mining companies is spending $2 billion tunnelling beneath a vast open-pit mine. De Beers spent 25 years digging a 450-metre deep by one-kilometre wide hole to access diamond-rich rock from the surface at the Venetia mine, close to the border with Zimbabwe and Botswana.
Now a whole new underground mine is being constructed underneath the hole to reach diamonds more than 1,000 metres below ground -- a big bet by De Beers that their investment will reap decades of profit.
In recent years, diamond prices have fluctuated sharply. After the global economic crisis in 2008, prices recovered quickly to hit a peak in 2011 before falling about 20 percent to slightly below their current rate. Amid such swings, mining companies must judge whether it is profitable to prospect for diamonds in increasingly difficult geological conditions, or in unstable countries such as Angola and the Democratic Republic of Congo.
Reflecting widespread uncertainty in the industry, De Beers -- the world's largest supplier of diamonds by value -- shut diamond mines in Canada and Botswana last year. It also sold its last mine in the South African town of Kimberley, where the diamond industry was born and where De Beers was founded in 1888 by British colonialist Cecil Rhodes.
But the Venetia mine is set to become one of the world's five biggest diamond mines after its conversion from open-pit to underground operations is finally completed in 2022. Current predictions suggest the mine will then operate until at least 2043.
Demand for diamonds over the last decade has been driven by a new generation of buyers in China and India that have adopted the tradition of giving diamond engagement rings. Latest figures suggest that such new markets are fragile. De Beers last month reported that global demand for diamond jewellery grew two percent in 2015 with growth strongest in the United States and China.
A fresh challenge that the industry faces is the emergence of synthetic diamonds, which are predicted to rapidly fall in price over the next 10 years as the manufacturing technology and quality improves. But mining companies hope a real diamond dug out of the deep ground will still be the last word in luxury long into the future.
