83 posts categorized "Diamond Mining"

Argyle mine set to meet changing Chinese demand for diamonds: Rio | MINING.com

Argyle-pink-diamonds 300x250Rio Tinto’s (ASX, LON: RIO) Argyle mine in Western Australia will play a key role in meeting China’s growing and changing demand for diamonds, thanks to the mine’s new underground section and its unique gems collection, said the firm Monday.

As the miner’s multi-million-dollar Argyle rare red, blue and pink gems debuted in Hong Kong, the chief executive of the company's diamonds and minerals division, Alan Davies, said demand for diamond jewellery in China is expected to grow strongly into the next decade.

Currently, China is the world’s second-largest diamond market, according to consulting firm Bain & Co., but Rio says Chinese tastes in diamond jewellery are shifting from an emphasis on large white gems to more coloured rocks for everyday wear.

And to ensure the new demands are met, Rio has opened its doors to about 100 carefully selected gem enthusiasts in Hong Kong, who will be able to see —for the first time in the 30-year history of the Argyle diamonds exhibit— three “fancy red” rocks, including the famous 1.56-carat Argyle Phoenix.

Jewellery makers, connoisseurs, collectors and investors – by invitation only – will view the 64 diamonds of this year's tender, which have a combined weight of 54.99 carats.

The company is hoping they will sell for more than $1 million per carat.

Due to their shortage, red diamonds are extremely hard to estimate in price. Earlier this year, a 1.92-carat red diamond sold for over $3.2 million, or $1.6 million per carat, at a Christie’s auction in Geneva. The sale set a record for a red diamond on a per-carat basis.

Other highlights at the tender include a 3.02 pink diamond named the Argyle Imperial. According to Rio Tinto, pink gems fetch on average 20 times the price of white diamonds of equivalent size.

Rio Tinto’s Argyle mine is home to 90% of the world’s new pink diamond production, said the company, even though pink diamonds account for less than 0.01% of its total production at the mine.

Image from Argyle Pink Diamonds

via www.mining.com


The state of 2013 global rough diamond supply | Resource Investor

Rough diamondRough diamonds achieved record prices in the summer of 2011, but prices have since slipped back to 2010 levels on global macroeconomic worries.  However, current prices are still higher than historic levels reached in the summer of 2008, and new supply is estimated to fall short of new demand over the next two decades, which could take prices back to new highs. According to a December Bain and Co. report, “The Global Diamond Industry: Portrait of Growth,” global diamond demand is expected to grow at 5.9% annually through 2020, while supply is only expected to grow at 2.7% over the same period of time.  (I think it is worth noting that when discussing diamond supply/demand, the demand is typically end user or purchaser demand of polished diamonds, while supply is typically rough diamond supply from mines.  There are sometimes divergences between rough and polished diamond prices, but generally speaking they are symbiotic.)

Modest-at-best new supply growth over the next 17 years can be attributed to mature mines approaching non-economic depths, and a lack of new projects to offset the diminishing production of the aging mines. Even with annual supply growth of 2.7% through 2020, the supply in 2020, estimated to be 157 million carats, will still not equal pre-financial crisis supply of 177 million carats produced in 2005.

Two of the largest diamond mines in the world, Canada’s Ekati and Diavik mines, have exhausted open pit resources and now are both underground mines. The need to convert a mine from an open pit operation to an underground operation typically results in curtailed production given the geology of kimberlite pipes (the geologic formation of the resource is shaped like a carrot, and gets narrower at depth). Ekati’s production declined 28% year-over-year (YOY) in 2012, and Davik’s production is estimated to decline 17% YOY in 2013.  Three more of the world’s largest mines are set to go underground over the next few years, as Russia’s Udachny mine is expected to be converted to an underground operation in the next two to four years, and Botswana’s Jwaneng and Orapa mines are expected to go underground shortly thereafter. 

Given that it can take more than a decade and $1billion to take a diamond project from discovery to production, there have been a very limited number of significant new projects in development since the mid-1990s.  Projects expected to come online in the next five years, with estimated annual production of 1 million carats or more are Canada’s Renard and Gahcho Kue projects, Botwana’s Ghagoo project, and Russia’s Grib, Lomonosov, Botuobinskaya, and Lomonosovsky projects.  Two other projects worth noting are Canada’s Chidliak and Star-Orion projects, which have the potential to be large mines, but are not likely to commence production any time soon.

The intention of this study is to focus solely on the new supply of gem-quality rough diamonds through mine production.  The mining of industrial grade (non-gem-quality) diamonds exclusively is not economic, thus, an estimated 98% of industrial grade diamond demand is supplied with synthetic (lab grown) diamonds.  However, mines do produce industrial grade diamonds, but only as a by-product.  On average, gem-quality diamonds only represent approximately 25% of a mines production, but account for 95% of the value of diamonds produced. It is important to understand that diamond mining is not just about the quantity of carats produced, but also the quality of diamonds produced. That said, for purposes of simplicity, this study is based on the assumption that the supply of rough diamonds is based on the quantity of carats produced, not the value of carats produced.

Global 2012 rough diamond production is estimated to have been 127 million carats, 2013 production is estimated to be 130 million carats.  The below chart details the production of the most significant diamond mines in the world, estimated to produce a combined 113 million carats in 2013 (or 87% of estimated 2013 supply). The balance of 2013 global rough diamond production (or 13% of estimated 2013 supply) not included below is composed of small-scale or informal mining operations, where production data is opaque or not available.  For example, the Democratic Republic of the Congo (DRC) is the third largest diamond producer in the world by volume, but there is only one commercial producer in the country, so the majority of DRC production data on a project basis is unreliable or not available at all. 

 via www.resourceinvestor.com

Denny's Comments

Like most industries, the price of diamonds is product of the balance between supply and demand.  This is especially true now that there are many diamond producers and no De Beers monopoly.  The lead time to bring on new diamond production is long and requires great investment so we can expect to see prices increase until this investment in new mines is justified.


Diamond Mining in Africa - Resource Investing News

Africa, the world’s largest producer of diamonds, has produced half of all diamonds. With 1.9 billion carats produced, the continent has mined about $158 billion worth of the gems.

African DiamondDiamond mining in Africa dates back to 1866, when the child of a Dutch farmer found a 22-carat diamond in what is now South Africa — that was the first known diamond discovered on the continent. When an 83-carat diamond was found three years later, it drew a rush of miners into South Africa.

The first four mines in Africa were dug in 1871 in areas around the Vaal River. The largest was Colesberg Kopje, nicknamed “the Big Hole,” in Kimberly. The wealth produced by these mines triggered industrial development, with modern shipping ports, along with travel and communication networks springing up throughout the subcontinent. That ultimately lead to two wars between the Dutch settlers (known as the Boers) and the British from 1880 to 1881 and 1899 to 1901. Over the next century, Africa continued to lead the world in diamond production.

The majority of Africa’s diamond empire is controlled by De Beers. The company controlled the flow and pricing of the diamond market for a large part of the 20th century after forming Anglo American Corporation in 1917 and establishing a central selling organization to stabilize sales.

Major diamond mining companies

De Beers is a holding company for various companies that explore for, trade in and produce diamonds; it is the world’s biggest diamond producer. Total sales decreased in 2012 by 16 percent, to $6.1 billion, though rough diamond sales increased 15 percent, to $5.5 billion. De Beers is predicting moderate growth in 2013 and the company expects strengthened fundamentals as diamond production plateaus and demand increases.

Anglo American (LSE: ALL) is an 85-percent shareholder in De Beers. Last year, the company saw an underlying operating profit of $496 million in diamonds alone, with a total underlying profit of $6.2 billion and $2.8 billion underlying earnings. The company predicts that robust demand for industrial commodities will boost growth for 2013.

Rio Tinto (LSE:RIO,ASX:RIO,NYSE:RIO) is another leading diamond producer that is active in mining, sales and marketing. The company reported $9.3 billion in underlying earnings for 2012. However, it recorded a net loss of $3 billion. New incoming CEO, Sam Walsh, who will officially take control of the company in July, said Rio will reduce its capital expenditure to $13 billion this year.

While Africa remains the center of global diamond production, Russia recently revealed a massive diamond mine of its own that may loosen the continent’s tight grip on the industry. Alrosa (MCX:ALNU) is a Russia-based company that explores, mines, manufactures and sells rough diamonds. The company accounts for 25 percent of global diamond production and 94 percent of Russia’s overall diamond output.

A popular way to invest in diamonds is by physically holding them. Returns for diamonds beat those of equity for much of the last 15 years, according to the Financial Times. Three-carat diamonds increased by 145 percent and 5-carat diamonds increased by 171 percent between 1999 and 2011. However, it’s worth bearing in mind that diamond trading is an unregulated market. With De Beers retaining much of the trade, it can be difficult for private investors to break into the market. With the still relatively new diamond discovery in Russia, it is hard to say if the diamond market of today will be recognizable in years to come.

Source: http://resourceinvestingnews.com/55144-diamond-mining-in-africa.html

==DENNY'S COMMENTS========================

This is a nice overview of Diamond Mining in Africa and how it has evolved to its current status.


Petra Diamonds finds rare 25.5 carat blue stone - Telegraph

TPetra_Diamond_blue_25.5 carathe diamond is a rare blue colour and Petra says the stone is considered to be a “high quality gem diamond of top colour”.

The Cullinan mine is renowned for its large diamonds, with many stones discovered there now set within the Crown Jewels. These include the Great Star of Africa which was discovered at the mine in 1905.

“Blue diamonds are the rarest of all diamond and Cullinan is one of the largest producers of the stones,” Jeremy Dibb, an analyst at broker Canaccord said. “Cullinan produced an important blue stone following the acquisition by Petra Diamonds.”

This previously discovered 26.6 carat fancy vivid blue stone was cut into an internally flawless 7.03 carat polished stone.

This blue diamond was sold at auction at Southeby’s in May 2009 and achieving a record price per carat for any gemstone sold at auction, hitting $9.49m or $1.35m per carat.

Petra Diamonds, a member of the FTSE 250 index, saw its shares rise 0.6p to 108p following the discovery.

via www.telegraph.co.uk

The most famous blue diamond is the Hope Diamond housed in the Hall of Geology, Gems and Minerals at the National Museum of Natural History.


'Largest' Diamond Mining Ship In The World Launched

Marine diamond shipDiamond company De Beers announced the launch of what they are claiming is the largest sea-going vehicle in the world for mining diamonds, Rough and Polished reports. Otto Shikongo, chief executive of De Beers Marine Namibia, said that the latest addition to their fleet will harvest more ore and generate more revenue than any of their other ships. The boat, dubbed the MV Mafuta, will be the fifth in DebMarine's arsenal, but will soon be single-handedly responsible for a full 30% of the firm's annual diamond production.

The vessel is capable of mining for rough diamonds underwater for over four days without taking a break. Within a year, it is able to recover approximately 350,000 carats of precious gems, according to Rough and Polished.

Source: The Israeli Diamond Industry


Dominion Diamond Sees Diamond Price Increase, Has Eyes on Diavik - JCK

Diavik-mineDominion Diamond Corp., formerly known as Harry Winston, has seen diamond prices rise over the last few months, and predicts they will continue to increase over the next year. 

While the company saw overall diamond prices decrease this year, it also found that prices rose 9 percent since August, and 6 percent in the current quarter, according to James R. W. Pounds, the company’s executive vice president, in a conference call following the release of its financial results.

He said he expects prices to plateau over the next couple of months, and then possibly increase again by the end of the year.

He noted that diamond demand remains uneven in India and China, but said the company is seeing “upbeat trends” in the United States, with strong indications that the American distribution channels were consolidating.

“Larger players now dominate what was once a fragmented market,” he said.

Company executives also dropped numerous hints they have their eyes on buying the rest of the Diavik mine, after purchasing nearby Ekati. The company currently owns 40 percent of Diavik, and the remainder is currently being offered for sale by owner Rio Tinto.

CEO Bob Gannicott talked at one point about possible benefits that could occur if Ekati and Diavik “were to come under common ownership.” Later, he added that it “was not clear at this time" whether Dominion would acquire Diavik.

The company completed the sale of its Harry Winston luxury brand division to Swatch this month. “That sales transaction brought us closer to the Swatch Group,” Gannicott said. “We contemplate a diamond supply relationship going forward.” 

Dominion said it expects to close its purchase of the Ekati diamond mine by April 10.

The company also reported mixed financial results.

Results from the fourth quarter of fiscal 2012 (ended Jan. 31):

  • Consolidated sales from continuing operations: Up 8 percent, to $110.1 million
  • Operating profit from continuing operations: Down 12 percent to $21.0 million Consolidated EBITDA from continuing operations: Down 6 percent to $45.3 million 
  • Rough diamond production: Up 19 percent to 1.9 million carats

Results from the 2012 fiscal year:

  • Consolidated sales from continuing operations: Up 19 percent to $345.4 million
  • Rough diamond production: Up 8 percent to 7.2 million carats  
  • Operating profit: Up 27 percent to $47.7 million   
  • Consolidated EBITDA from continuing operations: Up 10 percent to $127.9 million  

via www.jckonline.com


Harry Winston Finalizes $1 Billion to Swatch Group

Harry Winston logoThe sale of Harry Winston to watchmaking Swatch Group was rumored in October of last year, announced in earlier this year, and finalized March 26, 2013.  The price of the acquisition was $1 billion, Swatch assuming $250 million in debt and Winston netting $750 million.

The Harry Winston Diamond Corp was created in 2006 when Aber Corp, a Canadian diamond mining group, purchased the U.S. based Harry Winston luxury retail business.

Harry Winston Diamond Corp has now sold off the Harry Winston luxury retail division, which is the Harry Winston brand, and will change its name to Dominion Diamond Corp.  Dominion will continue as a diamond mining company that already owns 40 percent of the Diavik mine in Canada and is seeking to acquire the Ekati diamond mine, also in Canada.


Dubai Chronicle Top 10 Diamond Mining Companies for 2012

- Dubai Chronicle - http://www.dubaichronicle.com -

Top 10 Diamond Mining Companies for 2012

Posted By Editor On March 20, 2013 @ 2:16 pm In Investments,Trading Sessions | No Comments

Pinterest

1. Russia: Mirna Mine

Mirna Mine is the largest diamond deposit in Russia and one of the largest in the world. The mine is one of the most impressive places on earth and it is located near a small town known as Mirna, in Eastern Siberia. It was the first and the largest diamond mine in the Soviet Union. The mine is 525 meters deep, has a diameter of 1,200 meters and is the second largest excavated hole in the world. In the 1960s the mine was producing 2,000 kg of diamonds per year, but the production rate slowed to 400 kg per year near the pit bottom. The largest diamond found in the mine was found in 1980 and weighed 342.5 carats.

2. Australia: Argyle Diamond Mine

Argyle Diamond Mine is the largest producer in world, mostly industrial grade. Over 791 million carats of diamonds have been produced at the mine since it began production in 1983. From 2013, operations in the open pit will begin to wind down as Argyle transitions to a fully operational underground mine. At full production the underground mine will generate around nine million tons of ore per annum and approximately 20 million carats of diamonds per year, over the life of the block cave.

3. Botswana: Jwaneng Diamond Mine

Jwaneng Diamond Mine produces small stonesand and is the largest producer of diamonds by value in the world, producing about 40% of the world’s diamonds. The diamond industry contributes about 30% of national revenues, 80% of export earnings and 50% of government revenues of Botswana. The mine produces 9.3 million tons of ore per year. Currently, Jwaneng produces approximately 11 million carats (2,200 kg) of diamonds.

4. Angola: Catoca Diamond Mine

The Catoca Mine is the world’s 4th largest diamond mine and is currently being operated by SMC (Sociedade Miniera de Catoca), which is in turn owned by Endiama (32.8%), Russia’s Alrosa (32.8%), Brazil’s Odebrecht Mining (16.4%) and the Diamond Finance CY BV Group (18%). The mine produced just over 2.6 Mct in 2001. The kimberlite yields quality diamonds, of which 35% is gem quality, fetching prices of around $75 – $100/carat. Reserves are estimated at 60 million carats. SMC intends increasing production to as much as 5 Mct per year.

5. Angola: Luarica Diamond Mine

The mine is owned by a joint of diamond mining companies. The two largest holders are Endiama with 38% ownership and Trans Hex with 32% ownership. In 2004, the Luarica mine produced about 95,000 carats (19 kg) of diamond from over 632,000 cubic meters of ore processed. 84,000 carats (16.8 kg) of the production was sold the same year, at an average price of over $300 per carat. That made a new high mark for Angolan diamond output.

6. Botswana: Letlhakane Diamond Mine

The Letlhakane diamond mine is owned by Debswana – a joint diamond mining venture between De Beers and the government of Botswana. In 2010 about 3.3 million tons of ore were extracted at Letlhakane. Volume yielding was 1.2 million carats of rough diamonds.

7. Botswana: Orapa Diamond Mine

Orapa Diamond Mine is huge and highly productive. Diamonds are produced when volcanic activity causes carbon to be forced at extremes of pressure and temperature through a vent towards the surface. The pipe at Orapa is the second largest in the world. Annually the mine produces about 17m tons of ore from which 18m carats of diamonds are recovered, with a revenue of $3 billion.

8. Congo: Bakwanga MIBA Mine

Societé minière de Bakwanga (MIBA) is a mining company based in the Democratic Republic of the Congo. MIBA is a diamond mining company, and its operations are centered near Mbuji Mayi, in Kasai-Oriental Province in south central DRC. Between 2002 and 2006, MIBA produced an average of 6 million carats of diamonds per year. Operational difficulties reduced this production to an annual output of less than 1 million carats over the last two years. MIBA also has mining and exploration titles covering an area in excess of 45,000 km² and is currently looking for joint ventures with major diamond producers.

9. Sierra Leone: Magna Egoli Mine

Magna Egoli is Sierra Leone’s largest mechanized mine. It is fully owned by Waldman Diamond Resources of Israel. Magna Egoli started operations in 2001. The annual production worth $25 million has average weight of 0.57 carat and average value of $220 per carat, which is considered very high value for diamond rough. It produces 400 carats of diamonds per day.

10. South Africa: Cullinan Diamond Mine

Cullinan Diamond Mine is an underground diamond mine owned by Petra Diamonds. The mine became famous in 1905. That year the largest rough diamond of gem quality ever found known as Cullinan Diamond was found there. Cullinan Diamond Mine is also the only significant source of blue diamonds in the world. In September 2009, a 507-carat (101 g) diamond was found. The gem was ranked as one of the 20 biggest high quality diamonds ever discovered.

via www.dubaichronicle.com


Diamond Industry Copes with Crisis

 

EconomicCrisis

The past 12 months have been witnessed many forms of economic crisis and the diamond industry was no exception.  In past decades when demand for diamonds dropped, De Beers simply stockpiled diamonds to keep supplies and therefore prices stable.  However, in recent years the European Union has forbidden monopolistic activities (like stockpiling) and De Beers now only controls 40% of the diamond market compared to over 80% a few years ago so no longer has full control over diamond production.  As a result, the diamond industry had to implement new strategies to cope with the economic crisis.

The industry’s main tool was stopping production of diamonds.  De Beer’s mines in Botswana, Canada, and Namibia were mostly shut down with only about 10% production in the first quarter of 2009 compared to the same time in 2008.  While production is slowly being brought back online, some companies like Harry Winston Diamond Corporation has decided to cancel winter production at their Diavik Diamond Mine in Canada after a summer shutdown and production returning in the fall.

Rio Tinto shut down its Argyle diamond mine in Australia during the first quarter of this year resulting in a production drop for the country of almost 90%.

Alrosa, the Russian diamond producer, continued to produce diamonds but protected prices by having the Russian government purchase and stockpile the diamonds.

Even with the cuts in production, the dramatic drop in demand results in global polished diamond prices dropping 15.7% from August 2008 to August 2009.  Most of that drop occurred in the November to February period with prices being stable since May.

The past year produced the largest drop in diamond demand in more than 50 years with the most visible fall out being the weekly reports of bankruptcies in the retail and manufacturing sectors of the diamond industry.  Retailers in particular simply could not cut enough costs to compensate for the lack of sales.  Retailers and wholesalers who had made money by leveraging purchases of diamonds as the prices were going up suddenly saw their credit lines cut and interest rates rise at the same time their inventories lost 15% or more in value.

What can the diamond industry expect in the months ahead?  With the US economy slowly coming out of the recession and demand continuing to grow in China and India, demand should become more stable and head back up.  At the same time, many of the large diamond mines are moving from open pit to underground production, which will lower production levels.  The economic crisis has also delayed opening of any new mines so global production of diamonds will soon be outpaced by supply again, which means diamond prices will soon return to their historic 3 to 4 percent annual inflation trends.  However, the that price inflation will likely see considerably short term fluctuations as the industry continues to react to the more chaotic global financial times.


De Beers Role Has Changed

De_beerscompany In discussions with clients the past few weeks, I have spent considerable time discussing the changes in the diamond industry, especially the role of De Beers.  The topic typically comes up when the diamond shopper makes a comment about De Beers owning vast supplies of rough diamonds and keeping diamond prices artificially high.

It becomes obvious that the average consumer is basing their perceptions of the diamond industry on stories that are now decades old.  Those of us who work in the industry every day are well aware that the industry has seen dramatic changes.

Botswanajwanengmine_3 For about 100 years, De Beers operated a near monopoly by either mining or buying as much as 70% of the world’s rough diamond supply.  They did use their stockpiles of diamond to control the supply and thus the price of diamonds, keeping the industry stable during times of widely fluctuating demand and production.  A byproduct of the tight De Beers control was that they ensured the bulk of the profit left the country where the diamonds were mined as quickly as the diamonds were moved to London for sorting and marketing.

In the last decade, De Beers has dramatically changed their business model under the direction of Gareth Penny, the current managing director.  Today, De Beers only manages the diamonds it mines, which totals about 40% of worldwide production.  That means other companies market 60% of the world’s rough diamonds.  The vast stockpiles of diamonds are long gone with only enough diamonds kept to keep the pipeline of diamonds moving fluidly.

Botswanadiamondsorting One of the other big changes is in how De Beers and the rest of the diamond industry are attempting to improve the lives of the miners and compatriots in the countries where the diamonds are mined.  There is no better example of this change than in Botswana.  The mines have long been operated as a equal partnership between De Beers and the government of Botswana but now the country is getting even more benefits.  De Beers has moved its diamond sorting operation from London to Gaborone, the capital of Botswana.  The new facility will employ 500 Botswana workers and generate another 2,500 support and related job, including 16 cutting and polishing factories built around the new sorting plant that will process about 22% of the world’s production.

The economic growth and governmental stability of Botswana have not gone unnoticed by other diamond producing countries, especially in Africa.  The De Beers/Botswana model is likely to be implemented in other countries and is expected to continue the ongoing positive change within the diamond industry.