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6 posts from April 2007

De Beers Invests in Mining Diamonds from the Ocean Floor

When most people think of diamond mining, they think of pipe mining where blasting and large trucks result in deep pits.  Alluvial mining is another type of mining where diamonds extraction is near the surface in areas where they diamonds washed by rivers for millions of years deposited.  Some of the diamonds that eroded out of the pipes and down the rivers end up in the ocean.  To mine diamonds from the ocean floor, ships with giant suction machines pull the gravel from the bottom of the sea to the surface to sort and filter the diamonds from the other rocks.  While these ships are expensive, there are prime ocean floor locations that have relatively high concentrations of diamonds and thus enable economic production.

De Beers recently christened a new ship, “Peace in Africa, the first marine diamond mining vessel to operate off the South African coast.  The marine mining project is the result of a $141.6 million investment by De Beers as it diversifies its diamond mining operations.

Much of the investment in the marine mining project in the South African Sea Areas has already benefited local South African companies and the estimated 30-year lifespan of the project promises economic development for South Africa for many years to come.

AGS Provides More Information on Diamond Quality Document

Agslogo The AGS Laboratories has announced some enhancements to their Diamond Quality Document (DQD) that will provide even more information for consumers trying to make a purchase decision. 

The previous DQD reports only listed grades for Light Performance Factor, Proportion Factor, and Finish Factor without providing details on the eleven diamond characteristics that contributed to those factors comprising the AGS Cut Grade.  The new DQD will have a foldout flap that provides individual ratings on the eleven factors so consumers and retailers will have a better understanding of the diamond’s characteristics.  Some of the ratings are positives leading toward higher cut grades (0-cut is the best) and some are negatives that can lower the cut grade.

Four positive ratings comprise the Light Performance: Brightness, Contrast, Dispersion, and Leakage.

Three positive ratings and two lowering ratings comprise the Proportion Factor: Weight Ratio, Tilt, Durability are the positives while Girdle and Culet are the lowering ratings.

The remaining two lower ratings comprise the Finish Factor: Polish and Symmetry.

By providing detailed ratings at eleven levels, the AGS is providing consumers more visibility to information that was already being collected but was not visible previously.

Another change that will be applauded by retailers and consumers is that the Key to Symbols on the DQD report will now only show a list of characteristics that actually affect the clarity grade and/or plotted on the document.  Previous reports listed every characteristic possible, which was very alarming for consumers.  They would think they were considering a high clarity diamond but could see a long list of inclusions (some with ominous names) and wonder how all those things could be in the diamond if it was suppose to be high clarity.  This was especially the case where the consumer was looking at a copy of the DQD making the plot map difficult to read.  Now you will be able to see the list of predominate characteristics in that particular diamond just as the GIA has done on their diamond grading reports.

In summary, providing the eleven cut grade ratings and the diamond specific list of characteristics will give consumers better information for making their buying decision and shows that the AGS in making their report more consumer friendly.

Golconda Diamonds

Indian_diamond_areas_mapIndia was one of the first countries to mine diamonds, with diamonds discovered during the 4th century B.C.  Most of India’s diamond deposits are alluvial where millions of years of erosion caused by rainfall snowmelt, unearthed the diamonds from their kimberlite source, washed them downstream to their ultimate resting place in the river sediments of the Golconda region. Golconda was a region located between the lower reaches of the Godavari and Krishna rivers, in the present-day Indian state of Andhra Pradesh.

The Golconda diamonds were prized for their size and beauty, including some of the world’s most famous diamonds: the Hope Diamond, Orlov Diamond, Darya-i-Nur Diamond, Sanc Diamond, and the Koh-i-Noor Diamond.

Over centuries of time, the term “Golconda” became associated with high quality diamonds until the meaning of the term evolved.  Today the term is often misused for diamonds with incredible transparency, clarity, and “whiteness” found only in rare type-IIa natural diamonds, that are free from nitrogen that typically causes the yellow tint in diamonds. 

Unfortunately, some retailers use the term to describe high color diamonds that are not sourced from Golconda or type-IIa diamonds use “Golconda diamonds”.  These retailers are using the term to exaggerate their diamonds by misleading the consumer into thinking their diamonds are rarer and valuable than they truly are.   Real Golconda diamonds are extremely rare and likely to only seen in museums, collections, or at Sotheby or Christie’s auctions.  A local jeweler advertising a Golconda diamond is most likely incorrectly using the term and simply using it as misleading sales pitch.

Diamond Mining Activity in Lesotho

LesothopromisediamondGem Diamonds purchased the Letseng Diamond Mine from De Beers and almost immediately discovered four large diamonds weighing a total of 366 carats.  Then in October of 2006, the mine produced the 603-carat Lesotho Promise, the 15th-largest diamond found in the world.

These diamond discoveries have gained considerable attention in the diamond mining industry.  Lesotho Diamond Corporation is progressing plans to open a new mine near Kao which is targeted to produce several times the total carat weight production of diamonds as the Letseng Mine.  However, due to the larger stone production at Letseng, the expected average dollar value per carat is likely to be ten times that at the Kao Mine. 

The Liqhobong Mine, owned by European Diamonds, is recovering diamonds from Liqhobong’s main pipe. Two other mining companies are exploring in Lesotho.  Angel Diamonds is exploring the Kolo pipe and Motapa Diamonds is evaluating its Mothae kimberlite project.

Lesotho_mapThe government of Lesotho receives a royalty on diamond production and partial ownership in the mines.  The increased interest and subsequent investment in the country’s mining industry could prove to be a real boost to Lesotho’s economy.  Lesotho is an independent country surrounded by another country, the Republic of South Africa.  Formerly known as Basutoland, the country of Lesotho gained independence from South Africa in 1966.

Tiffany Yellow Diamond on Display at Smithsonian

National_museum_of_natural_histor_3 Opened in 1910, the National Museum of Natural History is part of the Smithsonian Institution and houses 125 million natural science specimens and cultural artifacts.  The Department of Mineral Sciences focuses on the study of the origin and evolution of minerals, gems, rocks, volcanoes, and meteorites.  What captures the media attention and are the biggest public draw are the gemstone exhibits, which feature such famous pieces as the 112-carat deep-blue Hope Diamond and 220 carat Star of Asia sapphire that are on permanent display.

In 2003, the Smithsonian was the location of a dazzling exhibit featuring the world’s seven rarest diamonds including the 59.6 carat Steimetz Pink, the 203 carat white Millennium Star, the 5.11 carat Moussaieff Red, the 1.01.29 carat vivid yellow Allnatt Diamond, the 5.51 carat blue-green Ocean Dream, the 27.64 carat deep-blue Heart of Eternity, and the 5.54 carat Pumpkin Diamond.

Tiffany_diamond From April 11, 2007 through September 23, 2007, another one of the world’s rarest and most valuable diamonds is on exhibit at the National Museum of Natural History.  The 128.54 carat Tiffany Diamond is a golden-yellow cushion-cut diamond named after is owner, Tiffany & Company.  Also known as, the Tiffany Yellow, the stone is part of the “Bird on a Rock” jewel created by Tiffany designer Jean Schlumberger in the 1960s.  The platinum and gold bird, covered with white and yellow diamonds with a ruby eye, is perched atop the Tiffany Diamond.

Founded by Charles Lewis Tiffany in 1837, Tiffany & Co. gained global recognition in the second half of the 1800s when the firm took advantage of the political turmoil in France.  Tiffany purchased 24 of the 69 French Crown Jewels in 1887 and numerous other famous colored diamonds.  However, a 287.42-carat rough diamond mined in South Africa in 1877 was to become the true attention getter for the firm.  Tiffany purchased the golden-yellow cushion-cut diamond for $18,000, shipped it to the United States, and put it on display in their store for viewing by millions of visitors over the next seventy years.

In June of 2006, the Tiffany & Co. Foundation donated $1.1 million to the Smithsonian as an endowment for the acquisition of gemstones for the Smithsonian’s gemstone collection.  The National Gem Collection, initiated in 1884, attracts more than five million visitors a year and its Hope Diamond, is the most popular museum object in the world.

De Beers Selling Cullinan Diamond Mine

CullinandiamondmineIn February, De Beers announced plans to sell one it’s most famous diamond mines, the Cullinan mine in South Africa.  First opened in 1902, the Cullinan mine has been the source of numerous large diamonds, including the legendary 3,106-carat Cullinan Diamond and is still a major producer of diamonds.  De Beers said the reason they are selling the mine is that the profitability of the operations there have fallen below standards they have set for the company’s business plan.

De Beers expects to replace the Cullinan diamond production from two new operations, namely the Voorspoed Mine in the Free State and the marine operations off the west coast of South Africa.  They considered extending operations at Cullinan with a new mine at deeper depths than current production but decided the operations were not a good economical fit with its overall business model.  The mine currently provides employment for 1,044 permanent and 194 temporary workers.

Because the Cullinan mine is an established operation with well-researched reserves, it is attractive to many smaller, low-overhead diamond producers.  De Beers has been conducting a series of screening of potential bidders and plans to let the qualifying bidders have access to the detailed information later this month.

Gem Diamonds, a London-based diamond company, reports to be one of the companies qualified for the bidding process.  Gem Diamonds recently purchased the Letseng Mine, which is also well known for producing unusually large carat weight diamonds, most recently a 603-carat and 216 carats.

The move by De Beers to sell the Cullinan mine is a sign of the times with mature diamond mines.  As operations must shift from open-pit to more expensive underground operations, companies must take a hard look the economics.  Another major factor is that the skills required for underground operations are different from those for the open-pit operations.  With many companies in the diamond industry making the move to underground at about the same time, those skills are harder to find.  Companies find themselves forced out of their comfort zone and into new types of operations that translates to increased risk in terms of investors and stockholder perceptions.