Diamond slump tests Namibia
Namibia's diamond industry faces a potentially prolonged downturn as falling prices and competition from laboratory-grown stones reshape the global market.
The challenge extends beyond weaker demand and excess inventories. Laboratory-grown diamonds are putting pressure on lower-value natural stones, raising questions about whether the industry can regain its former strength.
Diamonds remain an important source of export earnings, government revenue and employment for Namibia. The latest results from De Beers underline the pressure facing producers.
Namibia's diamond production fell by 7% to about 1.1 million carats in the first half of 2026, compared with the same period last year. Across the group, De Beers' average realised rough-diamond price dropped by 32% to US$105 per carat, while sales revenue declined from US$1.7 billion to US$1.3 billion.
A familiar slump, a different crisis
The global diamond industry has weathered major downturns in 1980, 1985, 2009 and 2015. Research by Bain & Company found that recoveries depended largely on the causes of each crisis.
Economic shocks generally proved easier to overcome than problems rooted within the diamond supply chain.
During the 2008–09 financial crisis, rough-diamond prices fell by 13%, but recovered to pre-crisis levels within about two years. The downturn that began in 2014 proved more persistent, as weak polished-diamond sales, slower growth in China and excess inventories drove prices down.
The Covid-19 pandemic delivered another blow in 2020, before a sharp rebound in 2021 and 2022 lifted De Beers' revenue to US$6.6 billion.
Namibia benefited, with diamond production rising from 1.47 million carats in 2021 to 2.14 million in 2022, supported by the commissioning of Debmarine Namibia's Benguela Gem and higher-grade production at land-based operations.
However, production continued to increase in 2023 even as international demand weakened, demonstrating that higher output does not necessarily translate into better prices or profitability.
Lab-grown stones change the equation
The current crisis combines cyclical weakness with a structural shift in the jewellery market.
Laboratory-grown diamonds offer consumers larger stones at substantially lower prices than comparable natural diamonds, particularly in lower-priced jewellery categories. This is challenging the natural-diamond industry's traditional pricing advantage.
De Beers said in its July 2026 production report that synthetic diamonds continued to affect demand for lower-value natural stones, while economic and geopolitical uncertainty weighed on consumer confidence.
The company's first-half results illustrate the pressure. Although production increased by 46% to 14.9 million carats, average realised prices fell by 32% to US$105 per carat.
De Beers reduced its underlying earnings before interest, tax, depreciation and amortisation loss from US$189 million in the first half of 2025 to US$113 million in the corresponding period this year, helped by better trading margins and lower operating costs.
The improvement points to the importance of cost control, but does not yet signal a broad recovery in the natural-diamond market.
Namibia adjusts to weaker conditions
Debmarine's production increased from 286,000 carats in the fourth quarter of 2025 to 354,000 in the first quarter of 2026 and 370,000 in the second quarter.
Despite the sequential improvement, first-half production totalled 724,000 carats, about 14% below the corresponding period last year.
Debmarine has invested about N$1.1 billion in two next-generation seabed-mining crawlers and an upgraded recovery system aboard the Benguela Gem. The investment is intended to improve efficiency and recover additional high-value diamonds.
However, higher production alone cannot shield the company from weak international prices. Profitability also depends on the quality of recovered stones and the cost of extracting them.
Debmarine chief executive Willy Mertens has previously identified weak demand in major consumer markets, geopolitical tensions, tariffs and competition from laboratory-grown stones as key challenges for natural diamonds.
For Namibia, the recovery will depend not only on a rebound in global demand, but also on whether natural diamonds can sustain their value in a changing market.
Previous downturns show that the industry can recover from sharp price falls. This time, however, producers must contend with a competitor that is changing consumer expectations, making a return to previous market conditions far from guaranteed.
