What are reasons diamonds are expensive?

They are rare (in part because supply is artificially restricted by owners of diamond mines and other wholesale diamond merchants), and they last virtually forever.

Another Answer

Eighty percent of all diamonds mined are industrial diamonds, which are not expensive. Gem-quality diamonds can be expensive. Supply of gem-quality diamonds is unrestricted, if you have the money to purchase them. The finest, highest-quality gem-stones are indeed rare.