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The Argyle diamond mine – fact versus fiction

In a few short decades, since its opening in 1983, the Argyle diamond mine in Western Australia has taken on an almost mythical status as the World’s premier source of pink and red diamonds. These prized stones formed deep beneath the earth several billion years ago as a result of a combination of very high temperatures and pressures causing carbon atoms to crystallize and grow into beautiful stones within the rocks. Later, as magma formed under tectonic conditions, these precious gems were forced upwards towards the surface. The rare colouration in diamonds are caused by tiny impurities trapped within the crystal’s structure when it is being formed deep within the earth. The Argyle mine site was discovered by a team of geologists exploring Western Australia’s rugged and remote Kimberley region in 1979, leading to full production by the mid-1980s. Today the Argyle site is one of the most technologically advanced mines in the world and it has become the most prolific producer of natural pink and brown diamonds on the planet!argyle-mine

(An aerial photo of the Argyle mine, Kimberley, Western Australia)

The statistics relating to the Argyle mine are truly staggering, it is responsible for more than 90% of the World’s high quality pink and red diamond production, yet fewer than 1% of the stones found at the mine are of this colour. In some extreme cases very large flawless, vivid pinks from the Argyle can fetch over £1 million per carat at auction, as with the “Pink Star” in Geneva in 2013. In fact, more than 80% of the stones produced at this site are brown, including the increasingly popular Champagne diamonds. Some of the rarer stones produced at the site include the “Argyle Violet,” a 2.83 carat, oval shaped diamond used as the centrepiece of the 2016 Argyle Pink Diamonds showcase. Rio Tinto Diamonds, the owner of the Argyle Mine, predicted that this stone would fetch more than £2 million when it is put to auction. Rio Tinto Diamonds Sales Manager, Patrick Coppens referred to the stone as “Impossibly rare and limited by nature, the Argyle Violet will be highly sought after for its beauty, size and provenance.” In more than three decades of production, the Argyle mine has only produced 12 carats of polished violet diamonds.

argyle-violet

The mine site covers approximately 50 hectares (120 acres) in one of the remotest regions of Australia. Due to the fact that the nearest settlement, Kununurra, is over 115 miles distant all of the workers at the site have to housed in purpose built accommodation. The majority of the 520 strong workforce hail from Perth some 1,200 miles away and work in 2 week shift rotations but Rio Tinto Diamonds have made a concerted effort to employ as many of the local indigenous people as possible. Geological surveys of the site have dated the diamonds in the area to be about 1.58 billion years old. The Argyle is the fourth largest diamond producing mine in the world by volume, averaging production levels of 8 million carats (1.6 tonnes) of rough per year, although production peaked in 1994 at 42 million carats. In all, the mine has produced over 750 million carats (150 tonnes) of rough diamonds since production began in 1983.

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(Location map of the remote Argyle Mine, Western Australia)

Cunning marketing by Rio Tinto Diamonds has enabled them to re-brand the historically unpopular brown diamond as ‘Champagne’ or ‘Cognac’ diamonds, increasing the profitability of the site (as 4 out of every 5 stones produced by the Argyle are brown). The red and pink diamonds produced by the Argyle naturally attract a very high premium. They are polished and sold by a specialised and highly select team of ateliers and dealers in Perth to a hungry world-wide audience. The processing and sorting of diamonds is done on site. Once they are removed from the ore they are acid washed and sorted prior to being transported to Perth. A sizeable volume of the smaller stones produced at Argyle (a site where average stone size tends to be small compared to other mines) are shipped to India for cutting. By virtue of lower wage costs, this method enables diamonds to be monetised that would otherwise be far too small to make a profit.

champagne-diamonds

(So called “Champagne” and “Cognac” diamonds have successfully rebranded the brown stones)

Ironically, given the mine’s reputation for producing some of the world’s most prized and valuable diamonds, the majority of the stones produced by the Argyle mine are on average low quality. Only 5% of the mined diamonds are of gem quality, compared with the global average of 20%. Of the remaining 95% around half are “near gem quality” and half are “industrial grade.” By colour, 79% are brown, 16% yellow, 2% white, 2% grey and less than 1% are the revered reds and pinks. When you consider that the 1% pink and red production accounts for over 90% of the global supply of these colours you get an idea for how scarce (and hence in demand) they are – every cut and polished deep pink and red stone produced globally in any given year would fit inside a single Champagne glass! Argyle diamonds have a tendency to fluoresce blue or dull green under ultraviolet light, giving gemmologists an immediate telltale indication of the origin.

champagne-glass

(Every cut & polished pink diamond produced at the Argyle in a year would fit in a Champagne glass)

Each year a collection of the finest Argyle pinks are offered via the world-famous Argyle Pink Diamond Tender. For every 1 million carats (200 KG) of rough pink stones produced by the mine, less than 1 carat (0.20 g) of polished gem will be offered for sale at the invitation only tender. Even access to the collector’s edition catalogue and website comes at a premium and via direction invitation. In 2009 Rio Tinto Diamonds announced the first ever tender of rare blue diamonds, produced in tiny quantities at the Argyle site over many years. Named the “Once in a Blue Moon” collection, and focusing on precious blue and violet diamonds weighing a total of 297 carats, the sale attracted huge interest in the industry. Due to the fact the vast majority of the stones produced at the Argyle mine are of inferior quality, the site is only able to operate profitably due to the presence of the high value pink and red stones. Rio Tinto believe there is less than 3 years’ viable production remaining at the site so it is likely to close for good by the end of the decade, leaving an uncertain price legacy for it’s much vaunted, high value stones.