Clifford Elphick was having lunch last month when he got a text message asking him to the call the office. Gem Diamonds, his company, had just discovered the world’s eighteenth-biggest white diamond in Lesotho.

“I had a message saying ‘Phone me urgently’,” he says. “I thought: ‘This is either good news or bad news.’ Funnily enough, we did order a bottle of champagne and have a toast.”

The uncut 493-carat diamond is expected to fetch up to $10 million (£4.9 million) when sold this month in Antwerp. It is the latest example of the burgeoning price growth in the diamond market.

While metals such as copper and zinc have stolen the headlines during the current commodity boom, diamond traders are now benefiting from their very own version of a “super-cycle”. In a market notorious for various grades and specifications, average prices for rough diamonds – those yet to be cut or polished for the retail trade, a process that can take 18 months – are up by 10 per cent year-on-year.

The price growth is even stronger for higher-quality stones, those often above two to five carats and containing fewer flaws or inclusions (spots caused by graphite).

Gem Diamonds is achieving average prices of $2,000 per carat for the diamonds discovered at its Letseng mine in Lesotho - 35 per cent above the levels seen a year ago.

Mr Elphick says: “There is a just a huge shortage out there. What has happened is that there’s no major new supply coming on stream and demand keeps getting greater.”

The price growth has yet to feed its way through to polished diamonds – those stones glittering on rings in high-street jewellers – but industry experts believe that it will do so after Christmas.

The last big diamond kimberlites (diamond-bearing rocks) to be discovered were in northwest Canada – Ekati, run by BHP Billiton, and Diavik, managed by Rio Tinto – in the early 1990s.

Despite huge exploration budgets, no discoveries have since been made to rival those owned by De Beers in Botswana and South Africa, sparking fears that natural diamond production may one day die out and be replaced by synthetics.

At the same time, global demand is growing by up to 5 per cent a year, fuelled by wealthy consumers in China, India and Russia.

De Beers, which controls 40 per cent of all rough diamond supply, is spending $100 million on exploration each year and will bring four new mines on stream next year.

However, Stephen Lussier, its executive director of external affairs, says that much will depend on the success of finding new kimberlites in emerging prospects such as Angola and the Democratic Republic of Congo.

He says: “We are seeing strong growth in demand from one carat up, there’s double-digit price growth. What we have seen is a change from the 1990s, when supply was rising clear of consumer demand. Now we are seeing a position where demand is rising strongly and supply is not keeping up.”

De Beers is part of the reason that prices for rough diamonds have been largely subdued in the past five years. The group, owned by Oppenheimer family and the Anglo American mining company, flooded the market with an estimated $5 billion of rough diamonds from its stocks when it was privatised in 2001. Industry experts believe that these have worked their way through the system, meaning that there is no artificial surplus left.

Mr Lussier adds that it is wrong to blame the shortage on the clampdown on “blood” diamonds – those stones mined in war zones and traded illicitly around the world. “Blood diamond production was negligible anyway,” he said. “If anything, supplies from countries like Angola have increased as wars have ceased.”

Philip Kenny, chief executive of the London-listed Firestone Diamonds, said: “The basic problem is that there is a shortfall in supply and no major world-class discovery for close to 15 years.

“Coupled with this, major mines such as Argyle in Australia are approaching their end of life. I think we could see another five years of strong rising diamond prices.”

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