The Argyle Diamond Mine in Western Australia, scheduled to be shut down in 2020 after 35 years of operation. .
Producing more than 90 percent of the country’s rough diamonds, at the peak of its production, in 1994, it was putting into the market some 42 million carats of mainly lower quality yellowish and brownish rough, about 40 percent of total world output.
But all this is scheduled to end in the fourth quarter of 2020, and possibly even sooner. Production at Argyle was down to 13 million carats in 2019, 8 percent below the figure reported for the year that preceded it. However, given the low value per carat of the goods produced, the mine’s owner, Rio Tinto, has ruled that the facility that still provides jobs to some 400 people is no longer economically viable.
Rio Tinto’s dilemma with Argyle has been that only 5 percent of the diamonds mined are of gem quality, compared to a worldwide average of 20 percent. Of the remaining 95 percent, there was an even split between near gem-quality and industrial grades. Some 80 percent of Argyle diamonds are brown, 16 percent yellow and only 2 percent white.
Rio Tinto has anticipated that it will take five years to decommission and dismantle the mine, and then meet environmental obligation, which means rehabilitating the natural environment.
FANCY PINK DIAMOND MARKET WILL FEEL THE PINCH
Where the closure of the mine is expected to have a more significant effect is on the fancy colored diamond market. For years already, Argyle has been regarded as the world’s most important producer of rare pink, red and purple colored diamonds.
“Argyle diamonds are known as the gold standard for pinks,” says Quig Bruning, a jewelry specialist at Sotheby’s, quoted in the Dujour newsletter. “I would anticipate that once the reality of the closure of this particular supply starts to sink in by 2021, 2022, prices will go up. I’d imagine it wouldn’t be dissimilar to what happens to an artist’s market after he or she passes away.”
As a homage to the soon-to-be-defunct mine, the Perth Mint in Western Australia has just released what it calls a Tiger coin, which is crafted from 10 ounces of 99.99 percent pure gold and adorned with a finely sculptured three-dimensional 18 carat rose gold tiger pavé set with nearly three carats of fancy vivid intense pink diamonds from Argyle.
The Ellendale Mine, located in the West Kimberley region of West Australia.
Fancy yellow diamonds produced at the Ellendale Mine.
AUSTRALIAN INDUSTRY DOWN BUT NOT OUT
But while the Australian diamond mining industry may be down, it’s not quite out. In December 2019, Western Australia’s Mines and Petroleum Minister, Bill Johnston, announced that Gibb River Diamonds had accepted his offer to apply for a new lease to mine at the mothballed Ellendale Mine, and he also invited India Bore Diamond Holdings to apply for other tenements at the site.
Ellendale, which is located in the West Kimberley region, was mined between 2002 and 2015 and is still considered to contain marketable diamonds. The mine has produced gem and industrial-quality stones, and during that period provided about half of the world’s fancy yellow diamonds. Among its major clients was Tiffany & Co., which in 2010 had negotiated exclusive rights to the fancy stones for the full economic life of the mine.
After Ellendale shut down five years ago, its owner, Kimberley Diamonds, relinquished its mining lease and environmental liabilities back to the government of Western Australia.
Gibb River Diamonds believes that with newly available technology and modest operating budget it can make a good profit from the fancy yellow diamond that still have not been mined.
“We’re looking at things in a very different way to how Kimberley Diamonds did it; it would be a more modest operation which doesn’t require the big plant and machinery,” said Jim Richards, the company’s chairman, speaking to the Australian Broadcasting Corporation. “You’re looking at an operation that only involves about 5-10 people to get up and running, not the hundreds that Kimberley Diamonds had [but] that doesn’t mean it can’t be very profitable.”