17 Jul 2019

ADP in the News as 2019 Argyle Tender Released

The 2019 Argyle Pink Diamonds Tender was unveiled last week, with this year’s collection comprised of 64 rare coloured diamonds, including three exceptionally rare Fancy Red diamonds, weighing 56.28 carats in total.

The stunning collection was released on site at the Argyle Diamond Mine in the East Kimberly Region of Western Australia, and will be showcased in Perth, Hong Kong and New York in the coming months.

Commenting on the incredible diamonds that make up the 2019 tender, Rio Tinto Copper and Diamonds Chief Executive, Arnaud Soirat, made note that; “These diamonds, each a natural treasure, are a testament to the enormous range and depth of offering from the Argyle ore body, nearly four decades from when production commenced.”

Even more importantly for investors, Soirat’s comments about this year’s Tender highlighted the shrinking supply and growing demand dynamics at play with regards to rare pink diamonds.

The Chief Executive confirmed that; “in late 2020 we’ll be stopping operations,” and that “Rio Tinto’s Argyle mine is the first and only ongoing source of rare pink diamonds in history. With the lifecycle of this extraordinary mine approaching its end, we have seen, and continue to see, unstoppable demand for these truly limited-edition diamonds and strong value appreciation.”

The top six lots included in this year’s 2019 Argyle Pink Diamond Tender, known as ‘Hero’ diamonds, range in size from 1.07 to 2.01 carats. Their names, carat size, shape and coloured are all listed below, as is a photo of these truly incredible diamonds.

  • Argyle Enigma™,1.75 carat modified radiant Fancy Red diamond
  • Argyle Amari™, 1.48 carat heart shaped Fancy Vivid Purplish Pink diamond
  • Argyle Elysian™, 1.20 carat modified cushion shaped Fancy Vivid Pink diamond
  • Argyle Verity™,1.37 carat oval shaped Fancy Vivid Purplish Pink diamond
  • Argyle Opus™, 2.01 carat round shaped Fancy Intense Pink diamond
  • Argyle Avenoir™, 1.07 carat oval shaped Fancy Red diamond
Rio Tinto Tender 2019

Image © Rio Tinto 2019.

Australian Diamond Portfolio’s View of the Tender

Last week, we spoke with Hamish Hastie, a journalist with Fairfax about the 2019 Argyle Pink Diamond Tender, and the implications of the pending closure of the mine. As we said to him, rare pink diamonds have always been the ultimate needle in the haystack, a comment that is backed up by Arnaud Soirat’s comments last week where he stated that “only one percent of Argyle production is made up of coloured diamonds every year”.

Moving forward, we remain convinced that the market forces responsible for driving diamond prices up over 500% in the past two decades are still in play, and if anything, are likely to be magnified in the years ahead.

After all – it stands to reason that as the haystack itself closes down, there will be upside pressure on diamond prices, as the supply of new stones to the market is almost completely curtailed.

This means that going forward, investors will only be able to source diamonds from each other, with mother nature no longer offering up the annual bounty that the Argyle mine has historically delivered.

Our view on the impact the closure of the Argyle Mine will have on prices is shared by many in the industry, including Pat Godin, the CEO of Stornoway Diamond Corp, who in an article published by Kitco stated that; “the rational offset between supply and demand should lead to price growth.”

This reinforces the trends that have been in place over the past two decades, which were highlighted by Rio Tinto in 2018 when they revealed that their previous tender had seen double digit price growth.

There are a couple of points worth expanding on when it comes to the impact of the mine closure on rare coloured diamond prices.

  • The effect on prices will NOT be uniform across the entire diamond market, and will be most evident across violet, red, and especially pink diamonds.
  • The effect on prices won’t only be limited to Argyle Tender stones, but rather to all pink diamonds, including those available at price points that accommodate a far wider range of investors.

The fact that news of this year’s Argyle Pink Diamonds Tender, and more importantly, the mine’s pending closure, is being spread far and wide only reinforces our bullish view on the outlook for prices, as it will likely precipitate a surge of buying interest from astute investors globally. The reaction we’ve seen from our clients in the last week, and the conversations that we’ve had with our contacts in the industry only reinforce this view.

The SMH article which includes some of our views on the tender, and on the outlook for rare coloured diamonds, can be accessed here.

If you would like to know more about the 2019 Argyle Pink Diamonds Tender, or about investing in rare coloured diamonds, please get in touch.

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