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 About Diamonds
The diamond on your finger might be 10 billion years old. Diamonds are made of carbon, the fourth most abundant element in the universe. Though abundant, diamond stones are hard to find in quantities sufficient to support economic mining. Diamonds originate deep in the earth and move to the surface in volcanic eruptions. Some 200 miles below the surface in the "mantle" carbon is pressured into diamond. They come to the surface in thin volcanoes known as "Kimberlite pipes". Diamonds are crystals which grow by adding layers of carbon atoms. The nature of carbon in diamond form creates the strongest bond known to chemistry. It is said that diamonds scratch every surface but no surface can scratch a diamond. Prior to the 6th century BC India was the only known source of diamonds. All but one of the producers were alluvial. Rare mention was made of diamonds in the early years of the Roman Empire but they effectively disappeared for 1000 years. From the 11th century onward references were made to diamonds from the East but it was only in the 13th century that kings, queens and nobles begin to acquire diamond jewelry. The discovery by the Portuguese of a direct route between India and Europe saw a major increase in the market in the early 1600's. The East India Company of London bought diamonds in Borneo and India and auctioned them in London. The discovery of diamonds in Brazil in 1730 broke the Indian monopoly. For 100 years Brazil was the major supplier to Europe. As with India, diamonds were found in alluvial deposits along the banks of rivers. In 1869 diamonds were first discovered in South Africa. Less than 20 years later Cecil Rhodes consolidated South African producers into De Beers - thus began the greatest cartel in history. For over 100 years De Beers controlled the world diamond industry. Even today the company controls 65% of world production. South Africa rapidly became the center of world diamonds. Though alluvial diamonds were significant it was the discovery of diamonds in rock that changed the world. The rock was named "kimberlite" after the area in which it was first discovered. Five mines in the Kimberley area produced fabulous wealth, four continue to produce. Throughout the 20th century new hard rock mines were discovered in South Africa - the Premier, the Finch and the Venetia to name but three. For over 130 years South Africa has remained in the top 4 producers worldwide. In 1908 alluvial diamonds were discovered in Namibia - a desert land. By following a long dried up river bed vast wealth was discovered on the beaches and more recently in the sea. Namibia's diamond production is mainly gemstone quality. Angola was the next African country to discover alluvial diamonds in 1912. Over a period of 60 years production grew until Angola became the 6th largest producer. Civil war has devastated the area but with 600 known kimberlite pipes waiting to be explored there is vast potential. In 1913 alluvial diamonds were discovered in the Congo. Rapid expansion took place and for decades the Congo was the worlds largest producer of mainly industrial diamonds. The deposit at MIBA is one of the world's most prolific mines producing 6m carats in 2000. Political strife and instability for over 40 years have greatly weakened the industry but significant potential exists. Major production is now dominated by Botswana, Australia, Russia, and Congo Republic (Zaire), but South Africa is still a major producer, in both volume and value. In the early 1960's diamonds were discovered in Botswana. Today Botswana is the worlds leading producer by value from four outstanding mines Orapa, Letlhakane, Jwaneng and Damtshaa. These mines hold reserves for 100 years. Systematic exploration in Russia began in the 1940's and within 10 years one of the world's greatest discoveries was made, the Mir and Udachaya pipes. Russia is the 4th largest producer in the world mainly from Udachaya which produced 12 million carats in 2001. There are over 1000 known kimberlite pipes in Russia. In 1976 the first kimberlite pipe was discovered in Australia but it was only in 1979 that the Argyle mine, now the worlds largest was found. This discovery has revolutionized diamond geology because it was found in lamproites not kimberlite and it was found in a younger aged rock. The diamonds from Argyle are small and coloured with only 5% of gemstone quality. Diamond exploration began in Canada in the late 1970's but it was not until 1990 that the Ekati kimberlite was found under a lake. The Ekati mine opened in 1998. The prospecting rush, which followed the first discovery, has led to three other economic discoveries Diavek, Snap Lake and Jerecho. The Canadian discoveries are significant because two are being developed by the world's largest mining companies, Billiton/BHP and Rio Tinto. These companies are larger than De Beers and will do their own marketing. The third discovery, Snap Lake, is a De Beers project. It is thought that Canada will be one of the world's largest diamond producers by volume and value within 8 years. Other countries have small diamond operations but one Sierra Leone has vast potential. Civil conflict for 30 years has destroyed much of the country. Prior to war Sierra Leone produced very high quality gemstone diamonds mainly alluvial. It is believed that significant potential exists to expand production. Why Africa for Diamonds? Africa is the richest continent for diamond mining. The major sources are in the south with lesser concentrations in the west-central part of the continent. The major producing countries are Congo Republic (Zaire), Botswana, South Africa, Angola, Namibia, Ghana, Central African Republic, Guinea, Sierra Leone, and Zimbabwe. Political turmoil in some countries has led to highly variable production and severe degradation of the environment from uncontrolled mining. The best place to look for diamonds is were there has been diamonds found before. The Diamond Industry At minesite the world diamond industry is worth $10 billion. By the time the stones become jewelry the industry is worth $60 billion. Exploration In the wilds of Africa, Russia, Canada and Australia prospectors look for "footprints" or "indicators". Footprints are outcrops in rocks or changed shapes, which may indicate the presence of kimberlite or lamproite. However, it is more common that explorers search riverbeds past and present for minerals such as garnets, which indicate that diamonds may be there. The reason for this is simple. Diamonds are ancient, more than 100 million years old. The rock in which they are contained has weathered and eroded. This results in diamonds being washed along rivers and streams even into the ocean. Exploration methods depend on whether alluvial or hard rock deposits are being sought. Alluvial deposits are sampled by taking systematic bulk samples of material and assaying the samples for diamonds. Hardrock exploration of pipes involves drilling, sampling and drilling Hard Rock Mining The unique feature of diamond mining is that the economics depend on finding individual stones. One large gemstone can make a mine viable for years. Most hard rock diamond mining is open-cast. Basically a conical pit is dug by blasting the rock and removing it with mechanical shovels and trucks. The steeply dipping pit may go to depths of 1000 feet. When the pit becomes too deep underground mining takes over. Once the rock is mined it must be crushed and sorted. Crushing is a critical operation as large diamonds can be destroyed in the process. Once crushed the ore is concentrated in a centrifuge type operation, which forces the diamonds to the bottom of a container. It is estimated that on average 0.001 percent of the original ore makes it to the bottom. Sorting then separates the diamonds from the rest of the concentrate. Many mines use a "Grease Belt". Diamonds stick to grease while other minerals do not. More modern mines use an X-Ray beam. Diamonds emit light when hit by an X-Ray. When the X-Ray hits a diamond a jet of air blasts the stone into a box. Alluvial Mining This is a simple process - remove the overburden, dig the gravels and extract the stones. The gravels are sieved into different sizes after which they are sorted by hand on tables. Bigger operations use mechanical equipment and grease tables. Recent developments have dredges working on rivers. They suck up the gravels from the riverbed, sort on board and return the waste to the river. Marine Deposits One of the greatest sources of gemstones in the world is the coast of Namibia. Diamonds were washed along long dead rivers across Africa into the Atlantic. Over the past 40 years vast quantities of gemstones have been recovered from the beaches and now the seas of Namibia. Recovery methods are similar to alluvial mining but involve huge tonnages and high-tech equipment, particularly the ships operating offshore. Sorting This involves categorizing the diamonds into: Gemstones, Near Gemstones, Industrial Diamonds. At this stage diamonds are known as "Rough". 80% of all diamonds are industrial with 20% being of gemstone quality. Stones are sorted by:
These classifications establish a price for the Rough Diamonds. Until 2001 there was a cartel run by De Beers, which controlled 80% of all of the world's diamonds. De Beers held 10 "sights" a year to which selected buyers were invited. They were offered packages of assorted rough diamonds, which they bid on. If the buyers did not purchase they were excluded from future sights. Over 50% of all rough diamonds continue to be sold through De Beers. The marketing of rough diamonds has changed radically with De Beers abandoning the cartel and new companies now marketing their output directly. The objective of the cartel was to control the price of rough diamonds. This it did for 100 years. Polishing/Cutting is what makes a diamond. Cutting began in the 13th century with the creation of a Point Cut, which was a polished flat eight-sided surface. Later the Table Cut appeared which was a flat surface, which greatly increased the amount of light returned to the eye. Later came the Rose Cut a flat bottom and a triangular faceted crown. The Brilliant cut was created in the 19th century by adding further facets to the Table Cut. These have now evolved into the Round Brilliant Cut which has many facets. This is based on a mathematical model to maximize light reflection and dispersion. Diamonds dictate how they should be cut. Cuts conceal flaws and maximize brilliance. Beginning in the 13th Century in Antwerp cutting skills have developed across the world with centers in New York, Antwerp, Tel Aviv and India. India has over 800,000 cutters preparing 80% of the world's gemstones by volume (50% by value). Retailing "A Diamond is forever". This slogan developed by De Beers in the 1960's is regarded as the best marketing slogan for the 20th century. It has become the foundation for the entire industry. It was only after the 2nd World War that attention was given to expanding the market for diamonds. With growing wealth in Western countries and Japan diamond jewelery became affordable to the masses in particular it became a symbol of love. Countries such as Japan where diamond giving was unknown has become a major market. Now China and India are been targeted. It is likely that retailing will play a more significant role in the diamond industry in future. The cracks, which have appeared in the diamond cartel, can only increase. De Beers have taken the lead in attempting to brand a diamonds. There is no doubt that in coming years more attention will be paid to marketing and branding. The value of diamonds more than double between the polishing room and the consumer. Commerciality of Diamonds Qualities Diamond is effectively the hardest and most brilliant mineral, making it an eternal store of value. Industrial diamonds play a key role in cutting and high wear applications. The vast difference between the hardness of diamond as opposed to every other mineral, mean that there is no effective substitute for demanding industrial applications. Diamond is virtually indestructible, but like any crystal, can shatter along a plane, particularly if flawed. These characteristics make it possible to craft a gem into the most brilliant and desirable shape. Cutters face a trade-off between maximising the size of the finished jewel and optimising its reflectiveness. Fashions evolve: some of the most ancient stones were re-cut in recent centuries to increase brilliance. Rarity Diamonds are very rare: only about 130 tonnes of rough diamonds have been found over the last 120 years. Even in rich ore, the grade is only about one carat per 3 tonnes of kimberlite, (One Carat = .2 of a gram = 1/150 of an ounce) or 1 part in 14 million. Gold explorers think in parts per million (grams gold per tonne of ore). Diamond explorers commonly think in parts per billion (carats per tens of tonnes). This is why diamond explorers use 'diamond indicators', rather than diamonds themselves. The best diamond indicator, of course, is a diamond. One in 22 kimberlite pipes is diamond-bearing. One in 50 is economic to exploit. When rich, they are highly profitable. Theft is a problem. The rarity and value of large stones, means that the statistical distortion of 'nugget effect' is more pronounced for diamonds than anything else. This makes exploration art as much as science. Successful primitive miners and experienced geologists display an intuitive sense for finding diamonds. The same individual make discoveries under different circumstances in different parts of the world and can explain why only in retrospect and with difficulty. This puts a premium on experience and past success. But artisanal miners are literally only 'scratching the surface'. They lack the technology and capital to mine a pipe or even riverbank. Market The bulk of value is in 'gemstones': larger, clearer, relatively flawless rocks amenable to cutting. The market is 50% controlled and largely underwritten by De Beers' cartel, usually called the 'Central Selling Organisation'. Diamonds represent most of the sector's value, about $10 billion yearly in sales of 'rough', or uncut stones. This translates into $25 billion of cut, but unset stones. Retail value is about $60 billion. The USA market is over one third of consumption. Diamond worth varies according to classification, of which there are nearly 500. Valuation is labour-intensive and highly subjective. Valuers must gamble on their estimate of the ultimate shape and qualities of the cut and polished jewel. The average price per rough carat (0.2gm) is $65, but varies widely by brightness, gem size, colour and shape. Australian diamonds are generally small and tinted, averaging $15. Namibian stones are clearer and bigger, averaging $260 per carat. In extreme examples large, brilliant gems may retail for nearly $1 million per carat. Though valuing individual stones is an art form, gemstone diamonds generally are not subject to wide price swings because the market is controlled. The African Diamond discovery on AK6 in Orapa Botswana has value of $138 per carat. Values recovered in the Koidu region of Sierra Leone by African Diamonds are in excess of $200 a carat WORLD DIAMOND PRODUCTION
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