The problems of the industry in general according to him are due the Japanese stagnation, Asians economic crisis and reliance for growth on the single US market so far as the demand is concerned, and the possibility of new mines going into production so far as the supply side is concerned.He emphasises in this context thaet there is no other Argyle mine in sight. On the other hand the superior rates of growth in small affordable diamonds are likely to continue. There has been, he adds, a continuous growth in the demand for diamond jewellery with intensive use of Argyle type product which consequently constitutes a growing niche market.

With 15 years of trading experience at its back, Argyle Diamonds has in its favour a sound customer base, proven market development programmes and demandtrends in the major consumer markets increasingly favouring the Argyle product -- small affordable diamonds with high perceived value.According to estimates made by Argyle Diamonds, the world production of rough diamonds is expected to increase at the rate of two or three per cent per annum. However, the bulk of the new supply coming on stream will be of better quality (with the average value of US$60-100 per carat). Even the Orapa mine in Botswana with its roughs likely to be valued around US$40 per carat, will not match with the Argyle product profile which is consequently expected to enjoy a strong competitive position in a growing market.

Argyle Diamonds has predicted that the world demand for roughs will grow at the annual rate of 2.6 per cent in real terms. It feels that the Asian financial crisis and the exchangte rate outlook for the region may lead to further demand shortfall, particularly in the higher quality product areas over the next few years. On the other hand, superior rates of growth insmall, affordable diamonds are likely to continue as "trading down" occurs.

As a result, the fundamentals for Argyle type products remain strong.As India has specialised in the polishing of Argyle type roughs it will, remain the dominant cutting centre and will also develop as an important consumer market. China is also likely to demonstrate considerable domestic growth, provided the market continues to remain insulated from regional issues.Argyle Diamonds feels that whilst diamond prices across the board are under pressure, experience has shown that in times of economic difficulties there is a general trading down to more affordable diamonds. The Japanese market which traditionally demanded large and better quality diamonds has in recent years shown a distinct trend for smaller polished diamonds. Argyle material has, therefore, performed relatively better in the current market. A similar trend can be seen in the Hong Kong market. In fact, small polished diamonds now comprise a major component of polisheddiamonds (less than 17 points) account for 62 per cent of the sales in the USA and 68 per cent in Japan.

Argyle's open market sales are aimed at providing customer value through a reliable supply of consistent assortments at market prices by (i) sorting the product to customer requirements (ii) sales from the Antwerp office to a competent customer base focused on the Indian diamond industry (iii) application of technology to optimise sorting and valuation process (iv) maintenance of an extensive industry intelligence network and (v) providing pre and post sales customer support programmes.

Argyle's sales strategy for rough diamonds is to sell the full range of production over the course of a market cycle. Stockpile sales are managed to reflect market conditions. Competitive prices are constantly monitored. It is not the reflect market conditions. Competitive prices are constantly monitored. It is not the policy of Argyle Diamonds to sell large quantities of goods into a weak market as this would have anadverse impact on the customer's liquidity position.

Meanwhile, steps are being taken to broaden the open pit mine at Argyle. It is estimated that this will enable the mine to access an additional 17.6 million tonnes of open pit ore at an average grade of 2.58 carats per tonne. The optimal mining rate is slikely to be 25-30 million carats per annum (plus-minus 10 per cent). With this programme in place, Argyle's mine-life will be extended well into the first decade of the next millenium. Within this timeframe, the underground option will also be re-examined.