A 16% drop in production was recorded in a three week period from January 08 to February 08 due to the shortage of electricity supply in South Africa.

During this time, a number of mines were temporarily closed and when the mines eventually resumed business, further blackouts occurred which affected not only the mines, but the national power supply of South Africa.

With all the false promises from the department of energy and bogus publicity, there is little improvement of the situation and it is expected that this could potentially damage the diamond industry indefinitely.

With the increase of production costs, South Africa will more than likely have to increase their rough diamond prices. Although a considerable amount of diamond production is done in South Africa, buyers may choose to find alternative sources to buy diamonds at more affordable or cheaper suppliers.

This chain of events will certainly result in the Gold prices increasing, thus affecting the diamond industry, a sensitive industry when it comes to pricing. Another matter of concern is the fact that South Africa is selling energy to its neighboring countries including Zimbabwe which is a country also in need of electricity supply for its mining industry.

It is expected that the cost of electricity supply could increase by 56% by mid June 2008. This will without a doubt have an effect on mining costs and the production of diamonds. With a shortage of rough diamonds, propaganda by the DTC could lead to many issues.

By Keven Brenan for diamondtopics.com