De Beers, which usually could maintain high prices for diamonds, limiting their supply

After more than two decades, diamond prices have experienced unceasing growth amid strong demand, the global diamond business is now experiencing difficulties along with other luxury industries, the International Herald Tribune reported . However, the diamond industry is different from other industries that produce goods from the luxury category, in that it depends on a single product. And this product is no longer under the control of the company De Beers, which usually could maintain high prices for diamonds, limiting their supply.

Hopes that the richer India and China will be able to fill the fall in demand were crossed out as soon as the recession reached Asia, causing the prices for diamonds to slide down by about 30% compared to their peak last August.

De Beers, in which mining giant Anglo American owns 45 percent of the shares, itself controls about 40% of the diamond market. In January of this year, De Beers said that by April it will cut production of rough diamonds by almost 50%.

The De Beers division recently placed on the shelf a deal to acquire a half stake in the Russian diamond mining company due to the financial crisis; Another daughter, De Beers, recently terminated a production agreement at a mine in South Africa.

Difficulties experienced by other diamond producers. ALROSA, the Russian state-owned company that produces diamonds, sharply declined in December last year due to falling demand.

However, the seeds of the current turmoil in the diamond industry were sown before the economic crisis, due to the fact that the producers of these precious stones accumulated large stocks of them and climbed into excessive debts.

The immediate outlook for the industry may look bleak, but some analysts argue that once the excessive amount of diamonds produced passes through the system, prices will recover. If new deposits of diamonds are not discovered, Tacy expert Haim Even-Zohar believes, the newly mined diamonds in the world will end in 20 years.

As soon as demand is restored, any shortage of diamonds will force prices to move up and force them to resume mining of these stones. "The long-term prospects look good," Haim Even-Zohar points out. "However, in the near future, countries and their people will experience difficult times."

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