The diamond industry pipeline starts with mining, then rough trading, manufacturing, jewelry setting and finally retailing. It may look like a short and efficient journey, however it is anything but that. In this new article series, the entire diamond pipeline will be presented from one end to the next, with facts and statistics on the issues it faces.
The diamond pipeline naturally developed on a regional basis. Some countries are rich in natural resources. Others have special skills, financing and high tech developments that make them manufacturing centers. Yet other regions are consuming markets.
Of course, the division is not clear-cut, and overlaps exist everywhere. The global economic structure also plays a hand in defining the roles of different regions, as this series of articles will show.
Producing countries are countries where diamonds are found and mined. There are two major bands around planet Earth, the northern band and the southern band. A third center band also has diamonds but of lower quantity and value.
The Northern band includes Russia and Canada, two of the leading diamond-producing countries. The Southern band includes Southern African states such as Botswana, South Africa and Namibia, as well as Australia. The center band includes the Ivory Coast and Sierra Leone in Africa, and Venezuela and Brazil in South America.
The top five producing countries by volume of production are Russia, Botswana, the Democratic Republic of Congo (DRC), Australia and Canada.
Russia holds what is believed to be the world’s largest and richest diamond resources. They are the world’s largest producer and exporter of rough diamonds by volume. In 2014, Russian miners extracted an estimated 38-39 million carats of diamonds. The main miner is ALROSA, which has a near monopoly on diamond mining in the country, accounting for well over 90% of the country’s annual production.
Mines: ALROSA mined 36.2 million carats of diamonds in 2014. Most of Russia’s (and ALROSA’s) mining deposits and current mining activities are in the Russian republic Yakutia, in the Siberian region of the country.
In Yakutia, ALROSA operates five open-pit mines, four underground mines and 14 alluvial placers. In the Arkhangelsk region in the country’s west, the company operates the Lomonosov deposit and two additional open-pit mines. The Grib diamond mine, also in the Arkhangelsk region, is a new mine operated by LUKoil. It currently produces about 1 million carats annually, which is expected to rise to 4 million carats annually when production reaches full speed.
According to the latest estimates, Russia has 973 million carats in total diamond resources. Of this, 608 million carats are known reserves.
Diamond Characteristics: The Russian diamond resources produce the full range of goods – all sizes, colors and clarities. They are known for their fluorescence, which is usually less desirable for gem quality diamonds. Another common feature of the Russian goods is that they are often in a shape known as Crystal, which has eight facets and sharp corners. Several Russian mines also produce fancy yellow diamonds.
Botswana is the leading diamond-producing country in terms of value, and the second largest in terms of volume. This is the home base of De Beers, and the source of most of its production today. In 2013, Botswana produced 23.2 million carats with a stated value of $3.63 billion.
Mines: The African country has seven mines. The two important ones are Orapa and
Jwaneng, two of the most prolific diamond mines in the world. Both are operated by De Beers, which also operates Letlhakane and Damtshaa. Lucara operates the Karowe mine, Kimberly Diamonds operates Lerala, and Gem Diamonds runs Ghaghoo.
Diamond Characteristics: Botswana’s resources produce the full range of diamonds, in all sizes, colors and clarities. Most of Botswana’s diamond production is gem quality, nicely-shaped dodecahedral stones in medium and high colors, and often with a greenish skin.
Democratic Republic of Congo (DRC)
Although the Democratic Republic of Congo (DRC) is Africa's largest diamond producer, production details remain sketchy. The DRC has a long history as a diamond mining country, and is today the third largest diamond-producing country by volume, despite a sharp decline in production in the past few years.
Most of the DRC's production is mined by the informal sector and not by mining companies. According to estimates, some 700,000 artisanal diamond miners mine the country’s alluvial mines. The only commercial diamond producer in the country is Miniere de Bakwange (MIBA), a joint venture between Belgian company Sibeka and the DRC government. De Beers holds a 20% stake in Sibeka, and markets about one third of the country's diamonds.
The DRC has large potential for additional diamond sectors. To date, diamond mining in the country has taken place on a small scale and only a considerably small area has been explored using modern technology.
In 2000, MIBA produced approximately 9 million carats. However, these figures fluctuate due to political tension in the Kasai region over the years. In 2013, DRC produced 15.7 million carats of diamonds with a total stated value of $138.7 million.
Diamond Characteristics: The MIBA goods are mostly composed of low color and quality, but other regions in the country are producing desirable high white and better quality diamonds.
Australia plays an important role in the diamond world – it is the leading producer of color diamonds. Australia is famous for its pink, purple and red diamonds, and an important producer of some of the finest yellow diamonds around. At the same time, most of the country’s production is of low color and clarity diamonds.
The largest diamond mine in Australia is Argyle, owned and operated by Rio Tinto. Argyle is a very prolific mine, producing more than 12 million carats annually, second only to Orapa in Botswana. Until recently, Argyle was an open pit mine. After several years of work, the mine is now an underground operation. The other two mines in Australia are Ellendale and Merlin, the latter of which is in ramp-up stages.
Argyle is the leading producer of brown and pink goods. The mine’s production served as the initial source of India’s then-budding diamond industry. Argyle’s pink, red, and purple goods are high-end and highly sought after. Argyle yields mostly near-gem and industrial quality goods. Only a small portion of its output, estimated at 5%, is gem quality.
Ellendale, operated by Kimberley Diamonds, primarily produces high quality fancy yellow diamonds. The Merlin diamond mine is famous for producing large, high clarity, white, and high value diamonds. Australia’s largest diamond, a 104.73 carat stone, was discovered at Merlin.
Throughout the 20th century, most people would never have thought of Canada as being an important producer of diamonds. Two dreamers with a firm belief put Canada on the rough diamond-producing countries’ map. In 1991, Chuck Fipke and Stewart Blossom found evidence of diamond-bearing Kimberlite pipes about 200 miles north of Yellowknife, in the Northwest Territories. Today, Canada is one of the largest diamond-producing countries in the world.
Canada has four active diamond mines: Diavik, Ekati, Snap Lake and Victor. Ekati was the first operational diamond mine in the country. A major resource with a good range of goods, it is owned and operated by Dominion Diamonds. Diavik, Canada’s second mine, is operated by Rio Tinto subsidiary on behalf of Rio and Dominion. The other two are operated by De Beers. For a short period, another diamond mine named Jericho operated as well. However, it was proven uneconomical and shut down.
In 2013, Canada produced 10.6 million carats at a relatively high average value of $1.9 billion, placing it as the world’s fifth largest diamond-producing country.
In addition to the mines already operating in Canada, there are a number of resources in various stages of development in the country, among them Stornoway Diamonds’ Renard and De Beers’ Gahcho Kué. Two other resources, Star-Orion and Chidliak, are in earlier stages of development.
Diamond Characteristics: The Canadian production is characterized by Crystals, coated diamonds (a black skin that envelopes the diamond) and cube shapes. Some of the Canadian goods are brown colors, famous for color improvement through the polishing process. However, most of the production tends to be medium and high white in color.
The above five leading diamond-producing countries accounted for nearly 76% of the global diamond production in 2013. They are no doubt the most important sources of diamonds by volume. By value, they represent more than 65% of the world’s $14 billion production.
The next section covers some smaller but important diamond-producing countries and their production.
Most of Zimbabwe’s countryside was explored for diamonds. It is Zimbabwe’s geology that encourages companies and even individuals to continue to look for more diamond resources. Although a large number of kimberlites were discovered in the country over the years, only a few proved to be economically feasible.
Zimbabwe produced 10.4 million carats, valued at $538.5 million, in 2013.
Diamond Mines: Zimbabwe’s first major diamond mine is Murowa, until recently owned and operated by Rio Tinto. There are also a number of alluvial diamond mines operated by international and local companies in Marange.
Diamond Characteristics: The Zimbabwean alluvial production typically has a larger average size, a large amount of larger stones, and most of the diamonds are coated with different color skins. Once polished, they tend to preserve a brown or green tinge. Often the rough diamonds result in fancy color stones.
Murowa produces beautifully shaped and smooth skin diamonds with high qualities and medium range colors – considered somewhat of an anomaly.
Angola has extensive diamond reserves estimated at 180 million carats. They are located principally in the provinces of Lunda Norte and Lunda Sul in the central and northeastern parts of the country. In 2013, Angola’s total rough diamond production was 9.4 million carats with a value of $1.28 billion.
Diamond Mines: The most important and largest diamond mine in Angola is Catoca. It is the world’s fourth largest kimberlite and one of the largest diamond mines in the world, producing more than 7 million carats annually. Sociedade Mineira de Catoca operates the mine.
In addition, Angola has several alluvial operations, typically operated by artisanal miners. Most notable among the alluvial operations is Somiluana, which is.
Kimberlite mining is done in agreement with ENDIAMA, the state-owned diamond mining company. The locally mined goods are marketed by SODIAM, the state-owned diamond marketing company.
Diamond Characteristics: Angola’s production is typically composed of round dodecahedral diamonds of medium and yellowish colors with a larger average size production and a larger than usual presence of larger stones.
South Africa’s rough diamond production is typically composed of perfectly round dodecahedral diamonds, in high white colors and qualities. Some of the most beautiful stones in the world are originally from South Africa. This includes The Cullinan diamond, which is the largest non-carbonado and largest gem-quality diamond ever found, at 3106.75 carats. South Africa is also home to some of the most amazing pink and blue diamonds, which were found over the last few years by Petra Diamonds.
South Africa has the most diverse range of diamond deposits in the world. Deposits include open pit and underground kimberlite pipe/dyke/fissure mining, alluvial mining, and on and offshore marine mining. Diamond mines in South Africa are operated by De Beers. Petra Diamonds bought many mines previously owned by De Beers and many other producers including Trans Hex and Diamondcorp.
South Africa’s total rough diamond production for 2013 was 8.1 million carats for a value of $1.19 billion, according to the Kimberley process report for 2013.
Although not a large producer of diamonds by volume, Lesotho is an interesting diamond-producing country because of the very large diamonds it produces on a rather consistent basis. The most important mine in the kingdom is Letseng.
High in the mountains, at an elevation of 3,100 meters above sea level, the mine operated by Gem Diamonds yields many 10.8 carat diamonds and larger, characterized by very high color and quality. Every year, this mine produces several diamonds larger than 100 carats, making it the highest price per carat production in the world. At the same time, the mine has a very low grade (carats per tonne of ore).
Other diamond mining projects in Lesotho include Lemphane, Liqhobong, the Mothae project and the Kao mine. These mines are in various stages of development or initial production.
Diamond Characteristics: Large block-shaped stones in high white colors and clarities characterize the Lesotho production. Total diamond production in Lesotho was 414,014 carats valued at $242.2 million, in 2013.
Other Producing Countries
Diamonds found in the Central African Republic, Ivory Coast, Brazil, and British Guinea, all located in the central band, have the same characteristics. They tend to be brownish, with a greenish skin and a round dodecahedra shape.
Diamonds found in Sierra Leone and Venezuela, which lie on the same latitudes, also have similar characteristics. They are square shaped and sometimes have a green coat. The Sierra Leone crystal-square shape has relatively high colors and is preferred to the Venezuelan production. Sierra Leone is also known for its green-coated diamonds. In Brazil, there is a high rate of pink, blue and other fancy color diamonds.
Together, the top 10 countries produce 99% of the world’s diamond production by volume and more than 97% by value.
The views expressed here are solely those of the author in his private capacity. None of the information made available here shall constitute in any manner an offer or invitation or promotion to buy or to sell diamonds. No one should act upon any opinion or information in this website (including with respect to diamonds values) without consulting a professional qualified adviser.
Diamond industrialist Ehud Arye Laniado is a man passionate about diamonds. From his early 20s in Africa and later in Belgium honing his expertise in forecasting the value of polished diamonds by examining rough diamonds by hand, till today four decades later, as chairman of his international diamond businesses spanning mining, exploration, rough and polished diamond valuation, trading, manufacturing, retail and consultancy services, Laniado has mastered both the miniscule details of evaluating and pricing individual rough diamonds and the entire structure of the diamond industry. Today, his global operations are at the forefront of the industry, recognised in diamond capitals from Mumbai to Tel Aviv and Hong Kong to New York.
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