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In a massive and resource-rich country like Canada, diamonds are a relatively small component of overall natural resource exports. Canada is a major exporter of gold, nickel, uranium, forestry products, and perhaps surprisingly, possesses the world’s second largest reserves of oil in the western part of the country. In 2015, Canada exported $231 billion in natural resources. Diamond exports were $2.4 billion, just one percent of resource exports. However, diamonds have been located in some of the most northern and often inhospitable locations in this vast country. So while the impact of diamonds on the economy as a whole has been relatively small, they have been critical to the sustainable development of many northern settlements. These small towns and villages suffer from harsh weather and a lack of employment opportunities, so diamonds have been instrumental in their success in the last 15 years.

Polished diamond prices dropped 1.7% in August, 2017 compared to the prior year, according to the Mercury Diamond Global Tracker™ (MDGT™), an index of polished diamond transaction prices. The sharp decline follows a period of milder price declines during the past few months, and rising concerns about the financial wellbeing of the diamond industry’s midstream. Polished diamond prices have been continuously declining for the past 33 months on a year-over-year basis. The last time the index showed an upward year-over-year trend was in November 2014.

South Africa has a very long and important role in the history of diamonds. It was there, in the 1860s, that diamonds were discovered on the banks of the Orange River. The resulting diamond rush, and the establishment of De Beers’ foothold on diamond mining, transformed the industry, helping to develop diamonds as a viable commercial product for more than just the world’s elite. At one point in time, almost all of the world’s diamond mining activity took place in South Africa. While the nation is still an important producer of diamonds, its role has diminished. Today South Africa is the world’s fourth largest diamond producer by value, according to Kimberley Process statistics.

Take a look at the following table. A quick view shows that the majority of the cells are red. The red cells indicate which polished diamond categories have an increased presence in the wholesale market. Each red cell tells us where inventories increased, and each green cell tells us which polished diamond categories decreased. The increases are in red as a warning, and the declines are green because they are potential (but not necessary) opportunities.

On September 20, 1966, Botswana declared its independence from Great Britain. At the time, the country had a GDP per capita of less than $84, and was one of the poorest and least developed countries on the planet. Just seven months later, in April 1967, geologists discovered the Orapa diamond mine within a cluster of kimberlites in the North-Central part of the country. The discovery set off a diamond rush that eventually led to the discovery of many more viable diamond mines, and elevated the country into one of the most important diamond producing nations in the world. Since that time, Botswana transformed itself into a thriving African nation, with diamonds central to its development.

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