The World’s Largest Diamond Mine is Shutting Down
Should you buy your diamond before the Argyle mine closes and supply drops?
The Argyle mine in Australia is the world’s largest single source of diamonds and accounts for over 90% of the global supply of pink diamonds. In 2020, the mine is set to cease operations and begin the long rehabilitation process. The question we’re all asking now is: what impact will this have on diamond prices?
Is Now the Time to Buy Diamonds?
Whether you’ve had the misfortune of sitting through an introductory economics course or not you know the basic rules of supply and demand. When supply decreases, prices will tend to increase and visa-versa. So, what effect will the closure of the Argyle mine have on global diamond supply?
If you have your heart set on a natural pink diamond, we can only expect the prices to go up from here.
The worldwide diamond mining industry currently produces somewhere around 140-150 million carats of rough diamonds in a year. Of that, the Argyle mine has contributed around 14-17 million carats in recent years. So, we are looking at around 10% of the total diamond supply going away. While that may seem like a large number (and it is) there are some other factors to keep in mind.
First, it is estimated that close to 75% of the diamonds that the Argyle mine’s produces are lower grade brown diamonds (often called chocolate or champagne diamonds). It’s not immediately clear how a reduction in supply of brown diamonds will impact the value of the colorless diamonds that are more commonly purchased for jewelry.
Second, the prices that definitely will be (and already have been) affected by the closure are those of pink diamonds. As we mentioned before, the vast majority of the world’s natural pink diamond supply comes from the Argyle mine. With the anticipation of its closure, we have already seen pink diamond prices go up, and we expect to see even more price increases as supply dwindles.
So, is now the time to buy? Maybe. If you have your heart set on a natural pink diamond, we can only expect the prices to go up from here. On the other hand, if you are looking for a more traditional, colorless diamond, we expect to see only minor price increases in the short term as demand remains fairly stable and the closure of this and other mines cause supply to drop moderately. In the end, unless you are a diamond speculator, you are buying your diamond to enjoy and to celebrate your love. Do it when the time is right for you.
Diamond Mining and the Environment
Another facet (excuse the pun) to this story is the environmental impact of diamond mining. It’s no question that the sprawling 124 acre site has had a significant impact on the environment around it, and faced with this kind of disruption many of us begin to feel uneasy about the prospect of buying a natural diamond. This is a big driving force behind the interest in lab grown diamonds which are believed to have a much smaller impact on the environment.
That said, one aspect of the mine’s closure that hasn’t gotten much press is the extensive plan that the owners (the Rio Tinto group) have to rehabilitate the environment after the mine is shutdown. According to the company’s environmental sustainability report, they expect the rehabilitation process to take up to two decades with further maintenance beyond that period. Rio Tinto has said that they will commit hundreds of millions of dollars to the rehabilitation effort which will address the final landform, water management, waste rock reshaping, biodiversity, and more.
Time, of course, will tell how effective the rehabilitation project is, but it’s great to see such initiative and investment from the mine owners. And, it comes in sharp contrast with the picture of profit obsessed disregard for nature that is often painted of the diamond industry.
So, there you have it, the world’s biggest diamond mine is closing next year and the owners will spend the next 20 years rehabilitating the site. Will you be taking this opportunity snag that pink or colorless diamond you’ve had your eye on? If so, please contact us, we would love to help you find the best deal and the best jewelry to set your new diamond in.
