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Lower Rough Supply Driving Greater Efficiency
Nov 9, 2021 10:13 AM
By Avi Krawitz
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RAPAPORT... Rough-diamond production is not expected to return to pre-pandemic levels. The coronavirus forced the mining companies to rethink their production programs and downscale accordingly. However, 2020 was always going to be a tipping point for supply.
Global output peaked in 2017 when the Gahcho Kué and Renard mines came onstream in Canada. It has been gradually declining since then, until last year when production slumped as operations were forced to shut in response to Covid-19.
While most deposits reopened within a year, the experience during the early part of the pandemic resulted in a realization that the trade could make do with less, as it’s going to have to in the long run. The permanent closure of the Argyle mine in Australia will have a more lasting effect when it comes to counting carats, wiping more than 10 million off the annual global-production schedule. Plus, Argyle will impact certain segments more than others, as it was generally a high-volume, low-value mine — with the exception of the beautiful pink diamonds for which it was most famous.
In volume terms, global production in 2021 is projected to edge up by 4%, as some mines such as Ekati and Renard in Canada and Grib in Russia have ramped up from their Covid-driven drop in 2020. That will somewhat compensate for the loss of Argyle.
Still, it appears the bar has been lowered in terms of the number of carats coming out of the ground, and these levels are expected to remain in the short to medium term. Acknowledging that, the mining companies have adopted a new message for the industry, encouraging efficiency along the distribution chain.
This ties into the way that rough is being sold, to whom and where it’s being distributed. It also correlates with how technology is being utilized, an emphasis on sustainability and responsible sourcing, and general consolidation in the market.
These elements are outlined in the November issue of the Rapaport Research Report. They will result in a tighter supply chain and raise competition for goods that are available, further highlighting the rarity of natural diamonds. Growth will be driven by pricing rather than volume.
That brings some uncertainty to the polished market, which is experiencing a spike in inventory at the moment, coupled with reports of shortages. Is the scarcity real, or is it more a question of finding goods at the right price? Polished suppliers are maintaining their prices based on their high rough costs. That dilemma may shape a theme for the trade moving forward. The industry’s more measured approach to mining will have a ripple effect on the rest of the supply chain.
The following is our annual estimation of rough diamond production and ranking of mines for 2020:
Global Diamond Production by Mine in 2020
| |
Mine |
Ownership |
Location |
Carats '000s
|
Change vs. 2019 |
| 1 |
Argyle |
Rio Tinto |
Australia |
10,945 |
-16% |
| 2 |
Orapa |
De Beers - Debswana |
Botswana |
9,021 |
-16% |
| 3 |
Jwaneng |
De Beers - Debswana |
Botswana |
7,538 |
-40% |
| 4 |
Gahcho Kué |
De Beers (51%), M. Province
(49%) |
Canada |
6,518 |
-4% |
| 5 |
Diavik |
Rio Tinto (60%), Dominion (40%)
|
Canada |
6,218 |
-7% |
| 6 |
Jubilee Pipe |
Alrosa - Aikhal
Division |
Russia |
6,209 |
-14% |
| 7 |
Catoca Mine |
Endiama (41%), Alrosa (41%), LLI (18%) |
Angola |
6,509 |
-13% |
| 8 |
Grib Diamond Mine |
AGD Diamonds (Otkritie
Holding) |
Russia |
3,700 |
-26% |
| 9 |
Udachnaya |
Alrosa - Udachny
Division |
Russia |
4,143 |
33% |
| 10 |
Venetia |
De Beers - DBCM |
S. Africa |
3,771 |
96% |
| 11 |
Almazy Anabara |
Alrosa |
Russia |
3,534 |
-32% |
| 12 |
Nyurba Alluvial |
Alrosa - Nyurba
Division |
Russia |
3,219 |
119% |
| 13 |
Nyurbinskaya Pipe |
Alrosa - Nyurba
Division |
Russia |
2,857 |
-13% |
| 14 |
Botuobinskaya Pipe |
Alrosa - Nyurba
Division |
Russia |
2,197 |
-60% |
| 15 |
Marange |
Zimbabwe Govt. &
Partners |
Zimbabwe |
2,091 |
27% |
| 16 |
International |
Alrosa - Mirny
Division |
Russia |
1,794 |
-17% |
| 17 |
Cullinan |
Petra Diamonds |
S. Africa |
1,698 |
-1% |
| 18 |
Aikhal Underground |
Alrosa - Aikhal
Division |
Russia |
1,640 |
-36% |
| 19 |
Arkhangelskaya Pipe |
Alrosa - Lomonosov Division |
Russia |
1,563 |
-25% |
| 20 |
Finsch |
Petra Diamonds |
S. Africa |
1,425 |
-17% |
| 21 |
Karpinskogo-1 Pipe |
Alrosa - Lomonosov Division |
Russia |
1,225 |
-41% |
| 22 |
Debmarine Namibia |
De Beers - Namdeb
Holdings |
Namibia |
1,125 |
-13% |
| 23 |
Renard |
Stornoway Diamond |
Canada |
825 |
-57% |
| 24 |
Ekati |
Arctic Canadian Diamond
Company |
Canada |
743 |
-89% |
| 25 |
Koidu |
Koidu Holdings |
S. Leone |
603 |
0% |
| 26 |
Murowa |
RZM Murowa Holdings |
Zimbabwe |
579 |
-15% |
| 27 |
Mirny Alluvial, Tailings |
Alrosa - Mirny Division |
Russia |
560 |
-33% |
| 28 |
Verkhne-Munskoe |
Alrosa - Udachny
Division |
Russia |
499 |
-67% |
| 29 |
Karowe |
Lucara Diamond Corp. |
Botswana |
382 |
-12% |
| 30 |
Namdeb (Land Ops) |
De Beers - Namdeb |
Namibia |
323 |
-21% |
| 31 |
Zarnitsa Pipe |
Alrosa - Udachny
Division |
Russia |
320 |
-58% |
| 32 |
Zarya Pipe |
Alrosa - Aikhal
Division |
Russia |
257 |
576% |
| 33 |
Kao |
Storm Mountain
Diamonds |
Lesotho |
184 |
-18% |
| 34 |
Liqhobong |
Firestone Diamonds |
Lesotho |
177 |
-75% |
| 35 |
Braúna |
Lipari Mineraçãu |
Brazil |
115 |
-18% |
| 36 |
Letšeng |
Gem Diamonds |
Lesotho |
101 |
-12% |
| 37 |
Williamson |
Petra Diamonds |
Tanzania |
76 |
-81% |
| 38 |
Koffiefontein |
Petra Diamonds |
S. Africa |
60 |
-27% |
| 39 |
Lulo Diamond Project |
Lucapa Diamond Company |
Angola |
24 |
25% |
| 40 |
Kareevlei |
Bluerock Diamonds |
S. Africa |
15 |
10% |
| 41 |
Mothae |
Lucapa Diamond Company |
Lesotho |
13 |
-55% |
| 42 |
Komsomolskaya |
Alrosa - Aikhal
Division |
Russia |
4 |
-99% |
| |
Other |
|
|
1,924 |
-7% |
| |
Formal
mining |
|
|
98,746 |
-20% |
| |
Artisanal |
|
|
13,096 |
-18% |
| |
Total |
|
|
111,842 |
-20% |
This article first appeared in the November Rapaport Research Report. The report presents proprietary data on polished diamond prices, along with market intelligence and analysis. Subscribe to the report here.
Image: The cover of the November Rapaport Research Report. (Shutterstock)
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Tags:
Alrosa, Avi Krawitz, De Beers, diamonds, ekati, Gahcho Kué, grib, Jewelry, Rapaport, Rapaport Research Report, renard
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