The diesel crisis sparked by the war against Iran is likely to force even more alluvial diamond miners to close cease operations, the South African Diamond Producers Organisation (Sadpo) says.
A decade ago South Africa’s alluvial sector, concentrated in the North West and the Northern Cape, had about 200 operators employing 5,000 people, but it had since shrunk to about one-tenth of that, Sadpo chair Gert van Niekerk told Business Times.
He said each passing month saw companies shutting up shop due to diesel costs, declining gem prices and other operational challenges.
“Currently we estimate that only around 20 companies remain in operation, employing approximately 1,000 people. This number is changing constantly, as operations are closing on a monthly basis. With upcoming increases in diesel and electricity costs, the situation is expected to become even more dire in the coming months,” he said.
Producers are grappling with a double whammy of rising costs for electricity and diesel. Eskom’s tariffs were hiked 8.76% from April 1 and the US-Israeli onslaught on Iran at the end of February led to a dramatic hike in the price of petroleum products.
“Many of the surviving alluvial operators have indicated that they will also enter into care and maintenance once their diesel stocks run out, as both current diesel prices and projected increases render continued operations to be financially not affordable,” Van Niekerk said.
The crisis extends beyond alluvial miners. A year ago, Petra Diamonds issued retrenchment notices to 200 employees at its Cullinan and Finsch mines, pointing to the industry’s longest downturn in more than 30 years
He said Sadpo was engaging with key stakeholders to try to ensure the survival of alluvial operators, who mine diamonds close to the surface. He said the discussions were “sensitive” and he could not elaborate.
Globally the diamond sector is on its knees due to depressed prices. Demand in major markets — the US, China and Europe — has waned as lab-grown diamonds have taken market share from natural gems.
The crisis extends beyond alluvial miners. A year ago, Petra Diamonds issued retrenchment notices to 200 employees at its Cullinan and Finsch mines, pointing to the industry’s longest downturn in more than 30 years.
Nosiphiwo Mzamo, CEO of the State Diamond Trader, said the industry was facing a “structural reset”. Key trends included supply restrictions on natural diamonds to stabilise prices and renewed marketing initiatives by the major players.
“Following a challenging 2025 where production was low, approximately 100-million carats, industry players are maintaining tight supply in 2026 to avoid further price devaluation.”
She said India, the major global hub for cutting and polishing rough diamonds, had been hit by the tariff hikes in the US and a slowing domestic market. Demand in China was relatively subdued, adding up to a generally cautious retail environment.
“Overall, 2026 is a transitional year for the diamond industry, characterised by a continued search for balance in a market with two distinct and competing products: natural and lab-grown,“ she said.
To promote demand for natural diamonds, major producing countries and De Beers signed the Luanda Accord in June last year, committing to contribute 1% of diamond revenues to a global marketing drive.
Lab-grown diamonds have been aggressively marketed, emphasising their more affordable pricing and the so-called greener production methods — a claim that is not entirely accurate
— Gert van Niekerk, Sadpo chair
Mzamo said the Luanda Accord, whose signatories include Botswana and Angola, has created a “co-ordinated wave of fresh promotions” and generated funding for a major marketing blitz ahead of the 2026 end-of-year holiday season.
“There are tentative signs of price stabilisation ... after six consecutive quarters of decline. Marketing efforts are focusing on provenance, rarity, and the ‘forever’ value of natural diamonds,“ she said.
Van Niekerk said producers of lab-grown diamonds were spending heavily on marketing the product as a cheaper and more environmentally friendly alternative to natural gems. This was influencing consumer behaviour and putting additional pressure on the natural diamond market.
“Lab-grown diamonds have been aggressively marketed, emphasising their more affordable pricing and the so-called greener production methods — a claim that is not entirely accurate,” he said.
As a result, prices for natural stones smaller than four carats had dropped by about half in the past four years, he said. This size category typically represents up to 90% of total production for smaller operations.
“Operating costs are now too high to justify recovery, leading many smaller producers, particularly in rural areas, to place their operations on care and maintenance, resulting in job losses and impacting the local communities.”
Van Niekerk said many South African producers, who operated on tight margins, could not afford the revenue contribution envisaged in the Luanda Accord.
“Sadpo has actively engaged in key discussions, including proposing a sliding scale for contributions to ensure marketing support is achievable and fair relative to producers’ financial capacity. This is still a work in progress, and no official agreement has yet been reached in South Africa,” Van Niekerk said.
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