South China's Guangdong Province imported more than $420 million worth of diamonds in the first quarter of the year, up 11.4 percent on 2006.

And the momentum is expected to continue in the following months, according to industry sources.

Guangdong, which borders the Hong Kong and Macao special administrative regions, has many diamond processing firms and has become an important processing base on the mainland.

The province's growing demand for diamonds is creating opportunities for producers from around the world.

More than 90 percent of Guangdong's diamond processors are in Guangzhou's Panyu District and the provincial capital's suburban city of Conghua, according to Guangzhou-based New Express Daily.

Panyu imported $160 million worth of diamonds between January and March this year, while Conghua's import totaled $130 million 90 percent of the province's total.

Guangdong's diamond processing companies include State-owned firms, joint ventures, foreign-funded corporations, processing firms and privately run companies.

In addition to the domestic market, many diamond products made in Guangdong are sold abroad.

The European Union (EU) and South Africa are Guangdong's two major sources of diamond this year, the paper said.

The EU's diamond exports to Guangdong reached $180 million in the first three months of the year, an increase of 7.4 percent on 2006, accounting for 43.8 percent of its total diamond import.

South Africa, the fifth-largest diamond producer in the world, sold more than $100 million worth of diamonds to the province from January to March, up 21.8 percent from the previous year.

The southern Chinese province imported $480 million worth of diamonds in 2001, but the figure grew to more than $1.7 billion in 2006.

The average annual growth rate reached 28.8 percent between 2001 and 2006. Guangdong's diamond imports from 2001 to 2006 represented more than 70 percent of the country's total in the period.

Editor: Yan