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Diamond |
AIMR 2011 |
Diamond
Diamond is composed of carbon and is the hardest known natural substance, although it can be shattered with a sharp blow. It also has the highest thermal conductivity at room temperature of any known material. Diamonds form 150–200 kilometres below the Earth’s surface at high temperatures (1050°C–1200°C) and pressures (45–55 kilobars). They are carried to the surface within kimberlite and lamproite magmas which intrude through the Earth’s crust. These intrusions form narrow cylindrical bodies called pipes, but only a very small proportion has significant diamond content. When pipes are eroded, liberated diamonds can accumulate in alluvial deposits and may be found far from their source. This is because their hardness allows them to survive multiple episodes of erosion and deposition.
The quality of diamonds is subdivided into gem, near gem and industrial categories. In rare cases, up to 90% of diamonds in a deposit are of gem quality, but most economic deposits contain 20% to 40% gem quality diamonds. Current uses for diamond include jewellery, mining and exploration, stone cutting and polishing, computer chip manufacture, machinery manufacture, construction and transportation services. A large proportion of industrial diamond is manufactured and it is possible to produce synthetic diamonds of gem quality.
Resources
Australia’s Economic Demonstrated Resources (EDR) increased by 37% in 2010 for both gem/near gem and industrial diamonds to 143.3 million carats (Mc) and 149.1Mc respectively. This increase is associated with the reclassification of some resources from paramarginal to economic at the Argyle mine in Western Australia (WA) where transition work from open pit to underground operations continues.
Accessible EDR
All diamond EDR is accessible for mining.
JORC Reserves
The Joint Ore Reserve Committee (JORC) Code reserves account for 58% of Accessible Economic Demonstrated Resources (AEDR). The remaining AEDR comprise those Measured and Indicated Resources reported by mining companies, which Geoscience Australia has assessed as being economic in the long term.
Production
Australia produced 10Mc of diamond in 2010, 0.8Mc less than in 2009 and about one third of what has been produced during many previous years. Production during 2010 was almost entirely from Rio Tinto’s Argyle mine, which produced 9.8Mc. Production at both of Australia's operating mines fell in 2010 due to processing difficulties at Ellendale and mining of lower ore grades at Argyle as the open pit operation reaches its final stages before the transition to underground mining. Argyle production is mostly industrial and cheap diamonds, but includes high value rare pink diamonds. Future targeted production from the underground operation at Argyle is expected to be about 20Mc per year.
World Ranking
Based on United States Geological Survey (USGS) data for other countries, Australia’s EDR of industrial diamond is 23.5% of current world economic resources and ranks second behind the Democratic Republic of the Congo (Kinshasa) with 23.6%. This compares with 18% of world EDR for industrial diamond and a rank of third in 2009. This increase can be attributed to the reclassification of some resources from paramarginal to economic at the Argyle mine in WA. No detailed data are available on world resources of gem/near gem diamond, but Australian stocks are among the largest for this category.
Australia ranks as the world’s fifth largest producer of diamond by weight (gem/near gem and industrial combined) after Russia, Botswana, Congo and Canada. The ranking is the same for gem/near gem diamond, with Australia the fifth largest producer after Botswana, Russia, Canada and Angola. For industrial grade diamond, Australia is the fourth largest producer after Russia, Congo and Botswana.
Industry Developments
Argyle (WA): During 2010, production continued at Rio Tinto's Argyle open cut operation, yielding 9.8Mc of diamonds, including valuable rare pink diamonds. This figure is 7% lower than 2009 production of 10.6Mc, and reflects lower ore grades encountered during the final stages of open cut. Development of the underground block cave mine continued in 2010, with minimal construction undertaken while surface mining continued. In September 2010, the Rio Tinto board approved the remaining US$803 million to complete construction of the underground project, bringing the total cost of the development to US$1.6 billion. Surface mining is expected to continue at Argyle until 2013 before transitioning to a wholly underground operation forecast to produce 20Mc a year until at least 2019. Production was lower than expected in the first half of 2011 due to extraction of lower ore grades from the North Pit and high rainfall.
Ellendale (WA): GEM Diamonds Limited continued production from the E9 pipe at Ellendale, with the E4 pipe remaining on care and maintenance. Production from the E9 pipe was 0.17Mc in 2010 from 4Mt of ore treated, compared with 0.2Mc produced in 2009, although 2009 also saw limited production from the E4 pipe. Carat production was lower than expected owing to processing complications arising from unusually high rainfall. Current life of mine at E9 is relatively short, with operations forecast to cease in 2014. To address this, work started in 2010 on a Resource Extension Programme, which aims to better define the mineral reserve and mine life at E9, define the opportunity for recommencing mining at E4 and assess the economic viability of the E7 and E11 satellite pipes, as well as carry out follow-up work on identified exploration targets. An average price of US$475/carat was achieved in 2010, compared to US$232/carat in 2009. An agreement brokered with the high-end jeweller, Tiffany and Co., in September 2010 negotiated a price increase of 25% for Ellendale fancy yellow diamonds. These yielded an average price of US$2891/carat in 2010, compared with US$2480 in 2009. The full effect of the negotiated price increase will be felt in 2011.
Venus Smoke Creek (WA): Discovery of alluvial diamonds in Smoke Creek in the late 1970s led to the discovery of the currently mined Argyle diamond pipe. Diamonds from Smoke Creek had a better quality distribution than the hard rock resource and were mined by Argyle Diamonds Limited. In November 2010 Venus Metals Corporation Limited announced an Inferred Resource of 17.9Mt containing 5Mc of diamonds, which was subsequently upgraded to 21.5Mt and 6Mc in September 2011. The Smoke Creek alluvial diamonds appear to be derived from erosion of the Argyle pipe, and therefore represent a possible new source of valuable pink diamonds.
Webb (WA): Meteoric Resources has signed a Heads of Agreement with North Australian Diamonds Limited to investigate geophysical anomalies located on Meteoric Resources' tenements in the western Arunta region. More than 50 magnetic anomalies have been recognised, which have many similarities to known kimberlite and lamproite pipes in other parts of Australia. Geophysical modelling indicates that the bodies have pipe-like geometries. So far, these anomalies are untested.
Merlin (NT): During 2010, work at North Australian Diamonds Limited's Merlin project focused on prefeasibility production trials aimed at assessing the economic viability of Merlin. A diamond parcel of 10 598 carats was recovered during these trials, with 24% of diamonds greater than one carat. The run of mine rough diamond parcel has been valued in excess of US$330/carat. A contract for a definitive feasibility study was awarded in August 2011, with the results expected in early 2012. Resource definition drilling at Merlin took place in early 2010 and led to an increase of the known resource from 21.5Mt to 30Mt of Indicated and Inferred Resources for a total of 7.2Mc of contained diamonds. In mid 2011, 11.1Mt of this resource was upgraded to Probable Ore Reserves.
Borroloola (NT): An exploration licence was granted to North Australian Diamonds Limited in September 2011 to test the diamond-bearing potential of gravels just south of the township of Borroloola in the Northern Territory. The prospect is located at the only major alluvial concentration at a topographic depression in a known diamond-bearing catchment. Initial work is scheduled to occur in the second half of 2011.