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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 ReportThe 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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