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Investment diamonds: a world trip along some enormous mines

You will undoubtedly have wondered at times: where do investment diamonds come from? BAUNAT DIAMONDS buys its rough gemstones from the diamond polishers. They buy theirs straight from the mining companies. But where do they source their valuable goods from? We will take you along on a fascinating world trip, along some of the most important sites.

Before we set off: we have deliberately not organised the mines in any particular order. This is because opinion is divided as to which is actually the largest. But each of the diamond mines mentioned has regularly featured in the top 10 list over the past few years. So they definitely all deserve a place in our overview.

  • Russia is one of the biggest diamond sites in the world. Approximately 80% of the global reserves come from the Republic of Sacha.
  • Diamonds are mined in Australia too, for example in the Argyle mine. However, this mine is possibly soon closing its doors.
  • In addition, there are many other mines on the African continent: in South Africa, with The Big Hole and Venetia and in Botswana with Jwaneng and Orapa.
  • Many of the mines are slowly but surely getting depleted. Which is why companies like De Beers and ALROSA are committing huge investments in expansions. They are searching for and finding new diamond reserves together, for example in Canada.

An increasingly scarcer product, but a constantly growing demand? This is the perfect time to invest in diamonds. BAUNAT DIAMONDS can provide you with top quality products at a competitive price, guaranteed conflict-free.

Russia: the unquestionable number one

Russia is the biggest diamond site in the world. This may surprise some people. But the subsoil is very rich in raw materials. Especially in the North of the country, in the Republic of Sacha. Approximately 80% of the diamond reserves in the world come from this region. Mining is incredibly complex, as we find ourselves in the High North here. But the mined ore often contains more diamonds, whilst the quality is comparable to other sites in the world. This makes mining here economically profitable.

According to figures from the Kimberley Process from 2013, 95% of all diamonds from Russia are produced by ALROSA. This Russian group, partly in the hands of the state, is therefore one of the biggest players in the world of diamond mining. Three of the four Russian mines we will be taking a closer look at below are operated by this company. In 2012 this represented 27% of the global diamond production, in accordance with the 2013 Global Diamond Report.

One of the mines you will find in Sacha is the Jubilee mine, owned by ALROSA and active since 1986. The site is supposed to contain more than 153 million carat (estimated in 2013) of minable diamonds. It produces approximately 10 million carat every year. The mine was 320 meters deep in 2015, but the operators wanted to continue to dig up to 720 meters below the surface.

There is another enormous mine near Jubilee, also owned by ALROSA: Oedatsjny, discovered in 1955, in use since 1971, considering the difficult circumstances. It’s currently one of the deepest open pit mines in the world, more than 600 meters. Approximately 10 million carat is also produced here every year. Plans are in place to continue mining via underground tunnels. After all, there is easily another 150 million carat down in the mines, good for 50 years of production.

Oedatsjny in Russia

The Mir diamond mine, also owned by ALROSA, was discovered in 1955. This mine is 525 meters deep and has a 1,200 meter diameter. It was the Soviet Union’s first and largest diamond mine. In the nineteen sixties it was good for 10 million carat per year. As they started to dig deeper into the mine, this annual revenue fell to 2 million per year. The open mine was eventually closed in 2001. It has been exploited underground since 2014, with an annual yield of 1 million carat. The reserves amount to 141 million carat (estimated in 2013). The mine has been (temporarily?) closed since 2017, as a result of flooding.

Mirmijn in Rusland

Not owned by ALROSA for a change: the young Grib Mine. This can be found in the North West of the Russian Federation, more specifically in Arkhangelsk, against the Arctic Ocean. Production started here in 2014. The total diamond reserve is supposed to amount to more than 98 million carat. The mine was developed by LUKoil, but the Russian oil company sold it for 1.45 billion dollars in 2017 to the Russian holding company Otkritie. The mine produced 4.4 million carat in 2017 and 3.8 million the previous year. The aim for 2018 is 4.9 million.

Australia: diamonds down under too

The Argyle Mine is located in East Kimberly, Western Australia. It’s owned by the mining company Rio Tinto and mining activities have been ongoing here since 1983. The mine had already produced 791 million carat by 2015. There is another estimated 140 million carat up for grabs, according to figures published in 2013. Yet the mine could possibly be closing in 2020, as the mining may no longer be profitable by then. Most of the gemstones mined from the Argyle Mine are brown and therefore difficult to sell. However, the mine has supplied a large part of the world’s stock of naturally coloured diamonds. For example, it’s the only important site for the very much desired pink and red variants.

Argyle in Australië

Angola: exceptional quality

Another large diamond mine is Catoca, in the African Angola, discovered in 1965. This is another open pit mine, which is still being operated in this way. The mine is supposed to contain an estimated 130 million carat of minable diamonds. The gemstones have been taken out of the ground since 1997. The mine is being operated by a conglomerate, which ALROSA also forms part of. In 2012, for example, they produced 6.7 million carat. Catoca only retrieves 1 carat per mined ton of ore, whilst the average is 2 to 4 carat per ton. But in 35% of cases this involved jewellery quality, so more than the average of 20%.

South Africa: a true diamond paradise for a long time

You will undoubtedly instantly think of the De Beers Group when you hear the word diamond mentioned. This mining company grew to its current size thanks to the enormous Big Hole. When Erasmus Jacobs found the first diamond there at the Oranjerivier in 1866, it sparked an incredible event: the New Rush. Fifty thousand mine employees started digging there. This resulted in the original site on a hill turning into an enormous pit over the course of time, which was an impressive 170 km² in size and 240 meters deep by the time it closed. The Kimberley mine is located below this, which reaches a depth of 1 kilometre. For a long time this was considered to be the deepest pit dug by hand. It produced a total of 3 tons of diamonds, until it closed in 1914.

Nowadays Venetia is the largest South African mine, also an open pit. It will undoubtedly come as no surprise this mine is owned by De Beers. The mine first opened in 1992. Its reserves amounted to more than 102 million carat in 2012. The annual production is an average of 4 million carat. De Beers freed up 2 billion dollars for an underground expansion of the mine in 2013, instantly also the largest investment in the South African diamond industry for decades. The underground production is supposed to start in 2022 and continue until 2046, good for 94 to 96 million carat.

Botswana: another top place in Africa

This African country is home to the Jwaneng Mine, in production since 1982. This is considered to be the richest diamond mine in the world, expressed in value. The gemstones are mined there by Debswana, a partnership between De Beers and the Botswana government. The mine produces an average of 12.5 to 15 million carat per year. The mine has been significantly expanded since 2010, good for a 3 billion dollar investment. This project is supposed to extend the mining activities until at least 2025 and produce an approximate total of 102 million carat.

Jwanengmijn in Botswana

Another big name in Botswana is the Orapa Mine, the ‘resting place for lions’, another open pit and active since 1971. This is the largest diamond mine in the literal sense of the word: it measures a total of 118 km² on the surface. The total reserves were estimated at 85.7 million carat in 2012. The annual production amounts to an average of 12 million carat.

Several mines are being depleted, but …

We regularly read about mines slowly being depleted right around the world. Experts have estimated that the global reserves will be reducing by 2% during the forthcoming years. Mining companies like De Beers and ALROSA are therefore committing significant investments to underground production infrastructures at existing sites. They are searching for and finding new diamond stocks at the same time.

For example, De Beers opened the Gahcho Kué mine in the ice-cold Canadian tundra, near the town of Yellowknife, in March 2017. There aren’t many figures to report on yet, but the estimated production amounts to an annual 4.5 million carat, for an 11 year period. The reserves are estimated at 50 million carat.

New diamond reserves are also being tapped into in Russia, like the aforementioned Grib Mine. ALROSA opened the Botuobinskaya mine in 2015, just like the Jubilee mine in the Republic of Sacha. The reserves amount to 70.9 million carat. Production is supposed to result in an annual 1.5 million carat, for a forty year duration.

And then there’s the latest evolution, the floating mines. De Beers is one of the companies mining for diamonds in front of the African country Namibia’s coastline ... diamonds which can be found at the bottom of the Atlantic Ocean. Vacuum tubes sucked up a total of 600 million dollars of diamonds in 2016.

Scarce? Time to invest in investment diamonds!

Of course that’s another way of looking at things. We already touched on the subject earlier: demand is rising year on year whilst the product will be ‘depleted’ one day. In other words: there is every chance the price is going to continue to rise over the forthcoming years. So now is the perfect moment to invest in diamonds, via one of our investment options. You will always pay an exceptionally competitive price, which you won’t find anywhere else.

And very important: our diamonds are never sourced from conflict areas. This is partly guaranteed by their Kimberley certificate. This system checks an impressive 98% of the market, according to NGO’s.

Author: Tom Dejonghe
Source: BAUNAT

With this article, BAUNAT strives to inform you thoroughly about investing in diamonds. No investment can be guaranteed to be without risk or fully according to your expectations. That is why we recommend to research the risks and aspects of investing in diamond properly to ensure that you make the right choice for your portfolio.

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