Kiran Gems, the world's leading manufacturer of natural diamonds, has announced a 10-day shutdown for its 50,000 employees. This decision, spanning from August 17 to August 27, is a strategic move to manage production levels in response to a sharp decline in global demand and rising inventory levels. The temporary closure is a significant step taken to address the ongoing recession within the diamond industry.
"The diamond industry is going through a bad patch... a recession period... as there is no demand for polished diamonds globally. We have declared a 10-day holiday so that the production of diamonds can be controlled. Such a decision was taken for the first time in the company’s history,” Kiran Gems chairman Vallabhbhai Lakhani told The Indian Express.
Geopolitical factors, including US-imposed sanctions and a G-7 ban on Russian-origin diamonds following the Russia-Ukraine conflict in 2022, have further increased the industry's difficulties. These measures have significantly impacted diamond manufacturers, who are already dealing with falling prices and a challenging market environment.
"The price of polished diamonds has gone down globally and it has become difficult for diamond manufacturers to run their business. If the supply is controlled, the demand will grow and it will benefit the industry," Lakhani elaborated.
Kiran Gems, a major face in the global diamond market with an annual turnover of Rs 17,000 crore, is an authorised purchaser of rough diamonds from De Beers. The company employs over 50,000 diamond polishers, with 40,000 focused on natural diamonds and 10,000 specialising in lab-grown diamonds. Lakhani indicated that the company is exploring options to compensate workers during the upcoming 10-day shutdown.
De Beers, a major global player in the diamond industry, reported a 15 per cent decrease in rough diamond production for the second quarter ending June this year. The company attributed this reduction to "higher than normal" inventory levels.
“If other diamond companies collectively take a similar decision, the production can be controlled, and it will help the industry," Lakhani added.