29 Jan

Brief Recap: The Argyle Diamond Mine

The closure will be a major milestone and its significance hasn’t been lost on the diamond community or investors of hard assets. The fact of the matter is that another mine hasn’t been found to take the Argyle mine’s place, and as the diamond and gemstone market follows the supply and demand model, when the Argyle mine closes, the supply of diamonds, and particularly the supply of pink diamonds, will be even more limited.

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For those still learning about the diamond industry or those who are unfamiliar with the importance of the Argyle diamond mine, a brief recap may be in order.

The Argyle mine is located in the remote East Kimberley region of Western Australia.  After discovery of the Argyle pipe in 1979, commercial mining of the deposit began in 1985.  Certainly, there were hopes that this mine would have a successful production life.  However, many did not expect anywhere near the kind of output that the mine has produced over the past thirty years.

In the world of diamonds and precious gemstones, the Argyle mine has assumed a brand of its own. In addition to being the fourth largest diamond mine in the world by volume, the mine has been the largest and most significant source of rare pink diamonds, producing more than 90% of the world’s supply.  While, pink diamonds can be found in other mines, (in Brazil, Russia and India for example), the Argyle mine is unmatched in the sheer quantity and quality of the pink diamonds it has produced over the years.

It’s clear that the Argyle mine occupies a special, not to mention influential, spot in the diamond and investment community, which has led to much speculation over the past several years as to what will happen when production at the Argyle mine ends.  All mines eventually burn out, and the Argyle mine, despite its success and renown, is no exception.

The Argyle mine will largely be depleted within 5 years. In 2013, Rio Tinto announced that it had extended the life of the Argyle mine by opening a new underground portion of the mine.  But, when taking in consideration the full life of the mine, this extension is fairly minor and the reality remains that by 2019, or perhaps a little later, the Argyle mine will either be closed or sold off.

Photo: Sun setting on the Argyle Diamond Mine in the East Kimberley Region of Western Australia.

Photo: Sun setting on the Argyle Diamond Mine in the East Kimberley Region of Western Australia.

So, the question is, how will the global marketplace react when this happens?

The closure will be a major milestone and its significance hasn’t been lost on the diamond community or investors of hard assets. The fact of the matter is that another mine hasn’t been found to take the Argyle mine’s place, and as the diamond and gemstone market follows the supply and demand model, when the Argyle mine closes, the supply of diamonds, and particularly the supply of pink diamonds, will be even more limited.  That will undoubtedly decrease global supply.

Already anticipating the Argyle mine’s closure, record sales of pink diamonds have been consistently reported with each auction season, and performance data across the market has demonstrated the steady appreciation of pink diamonds over the past decade.

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There’s no doubt it will be the end of an era when Argyle closes and we eagerly anticipate what the future holds.  Now’s the time to get in on diamonds and gemstones – we really don’t know if there will ever be another Argyle mine again.

 

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