AN INDUSTRY IN NEED OF RADICAL TRANSFORMATION
The diamond and gemstone market has remained largely unchanged for may hundreds of years and are is open to disruption and reinvigoration. The market is increasingly fragmented and requires ever increasing levels of capex and opex to deliver ever diminishing shareholder returns. Moreover, industry supply chains suffer from widespread resistance to change and innovation throughout, with industry leaders making limited use of technology and failing to recognise the potential value in smaller scale dynamic operations, which offer greater resilience to market volatility.
Importantly, while the industry remains fragmented and antiquated on the supply side, consumer demand remains strong:
Growth in demand for mined rough diamonds is expected to continue past 2030 as we see growth of GDP, the middle class and purchasing power, particularly in China and India.
Whilst the diamond industry was crippled early into the coronavirus pandemic, demand across the value chain remained resilient in comparison to the personal luxury market overall, picking back up particularly well towards the tail end of 2020 and into early 2021
More surprisingly, growth in demand for lab grown continues as concerns over environmental and social sustainability continue to rank higher in consumer decision making. A forecast predicts that this market has the potential to increase its value to approximately 29.2 billion U.S. dollars by 2025.
DEMAND FOR DIAMONDS
Global demand for coloured gemstones an continues to rise as awareness and appreciation grows among younger consumers
Along with coloured diamonds, gemstones offer improved consumer value, and increased differentiation which is of increased importance among the growing population of wealthy young consumers who look to reaffirm their identity and differentiate themselves through fashion and jewellery.
The use of coloured gemstones in jewellery continues to peak, particularly with regards to the big three, but increasingly with gemstones that offer greater rarity and traceability, including Paraiba Tourmaline, Spinel and Csarite
As of 2016 the value of all global coloured gemstone production was estimated at $2.5 billion, and by 2019 had experienced a y-on-y growth rate of roughly 4.4%
DEMAND FOR COLOURED GEMSTONES
All Star Minerals aims to capitalise on these opportunities, delivering transformational change and facilitating much needed innovation and development within the industry. More specifically, ASMO is focused on identifying and investing in small scale, dynamic and resilient diamond and coloured diamond operations and innovative lab-grown diamond technologies. We strongly believe that our experienced team, with a history of championing such disruptive change and a proven track record, can deliver on these objectives.
AREAS OF PARTICULAR INTEREST
DIAMOND AND GEMSTONE MINING
Covid-19 has played an important role in highlighting some of the prevailing weaknesses on both sides of the spectrum. With smaller scale miners being left with little to no support and an inability to access global markets, while investors were forced to absorb the impact of the larger firms lack of sales pipeline flexibility and significant operating costs.
All Star Minerals believes this presents an opportunity within the market, specifically the need for more dynamic and resilient cost structures, operating frameworks and innovative supply chain technologies. We believe that ASMO can deliver these transformational improvements through smaller scale setups at previously overlooked and underdeveloped assets, and through the use of pioneering sales and distribution platforms.
LAB GROWN DIAMONDS
With the growing moral obligation and consumer demand for environmental sustainability, there is ever increasing potential for the use of technologies which eliminate the environmental costs associated with large-scale mining, provide ample margins and thus opportunity for investment into global community stakeholders, offer highly competitive product quality, deliver favourable margins throughout the value chain, and provide unbeatable traceability, namely lab grown diamond technologies.
Whilst still largely shunned by the industry and misunderstood by international investors and consumers alike, such technologies are growing in popularity, particularly among Asian and North American companies who recognise their marketability. Equally, global designers and retailers are increasingly warming to the concept and beginning to appreciate the superior levels of traceability, quality and consistency of supply that lab grown diamonds offer.
With the market expected to grow to 29.2 billion U.S. dollars by 2025, ASMO believes there is significant potential. Accordingly, we believe that, with our experienced management team, we have the potential to build investor and consumer confidence and demand for lab grown diamonds.