Rio Tinto sold 56 single pink diamonds at the company’s latest tender, along with two reds and 19 lots of blues in what was described by the company as a “unique rainbow collection”.
The Australian mine produces more than 90 per cent of the world’s supply of pink diamonds and is said to have less than 10 year’s supply remaining in its subterranean operation.
In recent years, increasing numbers of Argyle pink diamonds have been purchased as investments, due to their beauty and growing rarity, which has helped further increase prices.
Australian diamond expert Garry Holloway, of Holloway’s Diamonds, said while he was not convinced the supply of pink diamonds from the mine was as close to drying up as what was sometimes portrayed, he expected the price to continue to climb as the mine aged.
“The Argyle mine was only ever going to operate until about now,” Holloway said. “If it wasn’t for the financial crisis it would have already stopped.”
Holloway said the decision to mine undergound at the site should prolong the supply of diamonds to close to 10 years, however, he said he believed Rio Tinto had encountered some geological problems in the early stages that may see underground mining at the site shelved and production cease within two to three years.
“They have found the geology to be very difficult, much more difficult than they thought that it would be. They probably wouldn’t have started the project had they known then what they know now.
“Argyle has been the main source of pink diamonds for a very long time, at the same time the Williamson Mine in South Africa had been the main source of blue diamonds. What we have seen is blue diamonds become more expensive [since Williamson Mine closed] so you might expect pink diamonds will become more expensive,” he said.
Holloway added: “there has been a rise as stocks have been depleted, but that is also as a result of the financial crisis, because we saw that some very rare things became a lot more expensive. So when people can’t put their money into shares to get a decent return and when bonds and interest rates are also low, what we have seen happen is people have gone to the safe haven of collectibles.”
Holloway believes that even if Rio Tinto decided it was unprofitable to continue to mine for pink diamonds at the site, he was confident a smaller company would invest in the site and find a way to profit from the remaining resources there.
In the meantime, Holloway said Rio Tinto’s ability to continue to produce diamonds of a quality and at a volume for its tenders similar to what it did 20 years ago, despite the mine’s output now being at around a 10th of what it was, indicated Rio Tinto still had significant stocks of mined diamonds in reserve.
He believed supply of the much sought after gemstone was not about to dry up overnight.
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