The diamond market will experience a significant change, as the world’s largest source of rare, pink diamonds is closing. The Argyle Diamond Mine in Western Australia is expected to finally close and end its production of the famed diamond types by the end of 2020. There are growing concerns in the diamond community as the 90% of all pink diamonds in circulation today came from the Argyle mines. The closure is so significant that analysts predict a substantial shortage of pink diamonds immediately after it happens.
History of the Argyle Diamond Mine
The story of the diamond mine started with a group of geologists exploring the Kimberly region in the 1970s. The group found a diamond in the area, which prompted the Rio Tinto corporation to open the Argyle Diamond Mine. Prospectors were confident that the site was a diamond deposit, and in 1983 the famed mine started its operations. The market for pink diamonds suddenly blew up as the site turned out to be a significant source of pink gems. From a modest start-up budget of only $100,000, the mines became a considerable producer of pink diamonds in the entire world.
The Rio Tinto Group
Rio Tinto Corporation is an Anglo-Australian corporation focused on mining and metals. It is among the largest producers of industry-grade metals and gems, as well. The company was founded in 1873 after a group of investors opened a mining complex in the Rio Tinto area in Spain. Since then, the company spread its mining industry to various countries. With the help of surveyors and geologists, Rio Tinto started to venture to gem production, which placed the company as part of the world’s foremost diamond produces.
Pink Diamond Production
The Argyle mine is among the largest producers of diamonds in the world. The mine annual output is (1,200 kg) or 8 million carats of diamonds. Since its opening, the diamond mine has produced a total of 750 million carats or (150,000 kg). For almost four decades, the mines have contributed nearly 18% of all diamonds in circulation today. However, due to the lowering prices in the market and the introduction of artificial diamonds, Rio Tinto decided to close the mines. The closure will not affect the company as it only accounts for more than 2% of profits the company makes annually. The mines reached peak output in 1994, when a total of 42 million carats of diamonds was mined.
Reason for the closure
The diamonds mined in Argyle are of average to low quality. An estimate shows that only 5% of the diamonds mined are of gem quality. Pink diamonds only make up 1% of the entire volume of diamonds produced in the Argyle mines, although the mine is a consistent producer of high-quality pink diamonds, which makes it a significant source. Despite this, the increasing operation cost and a stagnant diamond market, are forcing Argyle mines to close by 2020.
Another reason for the closure is that the mines are so deep now that further excavation is unviable. The drilling costs are growing, and profits deriving from the diamonds produced are not enough to cover operation costs. Also, the mines at its current operation has exhausted the supply of gems viable for the diamond market. The pink diamond market is lucrative, but it is no longer a sustainable enterprise for the group.
Origins of the Pink Diamond
The pink diamond is one of the rarest types of diamonds today. There are various theories on how these diamonds get their pinkish hue. The most popular theory involves the sudden thrust of white diamonds from the mantle to the crust a process which changes their molecular composition. Pink diamonds are not only type mined from the Kimberly’s Argyle mines. These kinds of diamonds are also produced in mines located in Russia, Brazil, Siberia, South Africa, Canada, and Tanzania. However, the Argyle mines are the most consistent producer of the said diamond type.
Effects of the Argyle closure in the diamond market
The closure of the Argyle mines will surely have an impact on the diamond market. The quality of the pink diamonds produced by the mine is of such good quality that jewellers are already wary of the closure in 2020. However, the closure could also have a positive effect on the diamond market. Since 2011, diamond prices have been in slow decline. It is due to the massive production of diamonds and the introduction of artificially made diamonds in the market. The demand for these gems has waned considerably, and this is hurting some companies that rely on profits derived from mining diamonds. However, by reducing the supply of diamonds in the market, it can stimulate the rise in prices and revitalise the diamond market.
Future of Rio Tinto
The company has other mining operations in various countries. Diamond production is just a small part of its mining empire. Management continues to assure everyone that they are still planning to return to the niche and produce high-quality gemstones. However, they are waiting for the market to stabilise, and diamond prices to increase in value. It is a prediction by analysts that the closure of the mines will result in an increase in diamond-prices. It is only a matter of time and determination by its investors for the company to once again delve into the diamond market and provide people with awe-inspiring gemstones such as what they’ve done with pink diamonds.
The Argyle diamond mine is one of the iconic locations in the diamond world. It is the source of beautiful pieces of stones that have become a widely sought-after all over the world. The future of the mines may be set in stone. However, Rio Tinto is still working hard to keep pace in the diamond market and maybe, in a few years after the closure, will come back and continue its position as a world leader in producing one of the rarest forms of diamonds on Earth.