Rough diamond prices have risen about 10% owing to supply concerns amid a new Covid-19 variant, Omicron, spreading in South Africa and Botswana. These two nations have some of the biggest mines of De Beers, the largest diamond miner in the world.

The surge in diamond prices coupled with a possible supply side constraint has sparked concerns among the diamond exporters of Surat and Mumbai, as they have robust orders in hand from the US, China and Far East.

Gems and jewellery comprise the second largest export earner for India, with diamonds accounting for more than 63% of this. India cuts and polishes 14 out of 15 diamonds in the world.

“Demand is outstripping supply,” Vipul Shah, vice-chairman, Gem & Jewellery Export Promotion Council (GJEPC), told ET. “The supply side is under pressure since the outbreak of Covid-19 last year. The situation was getting normalised. But now this new variant of Covid-19 has surfaced in South Africa and Botswana. It will further put a pressure on the supply side.”

Prices of rough diamonds have risen 5-10% in the past few days, prompting India’s diamond processors to hold back their stock. They are not keen to replace the stock since they will have to buy rough diamonds at a higher price.

Diamond cutting and polishing units in Surat had announced a longer Diwali vacation this year so as to put a check on polished diamond production. The units reopened on November 22. Though rough diamond prices have gone up, polished diamond prices have not gone up in the same proportion.

Sachin Jain, managing director, De Beers India, said, “As of now there is no problem regarding mining operations in our mines in South Africa and Botswana. But we have to wait and watch how things proceed. It is too early to comment.”

The fresh concerns have arisen at a time when exporters have been doing good business since the easing of the pandemic. “Demand will remain strong at least till the fourth quarter of 2021-22,” said Shah.