More discouraging news for the diamond industry:

While lower production will start building a floor under prices, we see little prospect of any significant improvement until well into 2009 and expect more juniors to cut back or leave the sector.

said Des Kilalea, analyst at RBC Capital Markets. 

He’s saying that pricing and demand will likely get worse for diamond producers before they get better. While certainly discouraging, we have to remember that the diamond industry is not in as dire straits as the financial sector or the American automakers. We know we can expect at least a 10% decline in demand for diamonds. Mining companies are claiming that the their costs of production are too high with current prices–and they certainly aren’t going to get a government bailout. Will this be enough to motivate the industry to truly embrace the changes I think it needs? I truly hope so.