Diamonds are in the rough
Lower U.S. demand for diamonds is affecting the chain that produce and sell the mineral, from jewelry stores to polishers. Gretchen Wilson explores how dire the situation is for the industry.
A 101-carat diamond is displayed at Christie's auction house in London (Leon Neal/AFP/Getty Images)
More on International, Africa
TEXT OF STORY
Bill Radke: The recession has curbed American demand for diamond jewelry, and some people say that's a healthy thing. But there are people all along the diamond chain who are suffering, as our Gretchen Wilson reports from Johannesburg.
Gretchen Wilson: At Intergems jewellery store in downtown Los Angeles, the glass cases are stocked, but foot traffic is well down. Proprietor Steve Pheng says business has seldom been so bad.
Steve Pheng: The only thing that I can compare it to was that sales were really down after 9/11. People, you know, are not as willing to part with their money as they used to. That's a hundred percent fact -- people don't have the disposable income like they used to.
The U.S. has long been the main market for diamonds. But Americans are now pinching pennies, and that's taken the shine off the entire global diamond industry.
John Bristow is CEO of Rockwell Diamonds in Johannesburg:
John Bristow: The diamond industry, like every other mineral commodity in the world, has taken a hit, and quite a substantial one, courtesy of the credit crunch.
Since Americans aren't buying diamonds, jewelery stores have lots on hand. So they're not buying new diamonds from auctions in New York. Which means the auction houses aren't buying from diamond polishers in India, who in turn aren't buying the rough diamonds that come out of the ground here in South Africa.
Rockwell Diamonds has had to layoff hundreds of people, cutting its workforce by a third.
Bristow: It's not a pleasant situation, but you know, it's an economic necessity at this point and time.
Even South African mining giant De Beers is halting some of its operations. Spokesman Tom Tweedy insists, however, that streamlining in recent years will keep De Beers alive.
Tom Tweedy: So while the challenges are real and enormous, they are not challenges we cannot over come. We're fit for business.
Thousands of miners have lost their jobs. But the reasons are so clear, even the National Mineworkers' Union isn't putting up much of a fight. Lesiba Seshoka is the union's spokesman:
Lesiba Seshoka: Unfortunately, it's a dire situation. There's nothing that we can do.
Nothing directly, at least. They can only hope that the global recession will lift and that Americans will start spending on diamonds again.
In Johannesburg, I'm Gretchen Wilson for Marketplace.
Comments
Comment | Refresh
From Stewartstown, PA, 04/15/2009
In Gretchen Wilson's story about diamonds, I think it might have been useful to explain that the auctions referred to are not the auctions that most of us are familiar with, namely Christies, Sotheby's, etc., wherein jewelry is sold to the public.
Post a Comment: Please be civil, brief and relevant.
Email addresses are never displayed, but they are required to confirm your comments. All comments are moderated. Marketplace reserves the right to edit any comments on this site and to read them on the air if they are extra-interesting. Please read the Comment Guidelines before posting.
You must be 13 or over to submit information to American Public Media. The information entered into this form will not be used to send unsolicited email and will not be sold to a third party. For more information see Terms and Conditions and Privacy Policy.