Diamond

Content maintained by Keith Porrit

• Diamond
• Resources
• Accessible EDR
• JORC Reserves
• Exploration
• Production
• World Ranking
• Industry Developments

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 (km) 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 lamproites which intrude through the earth's crust. These intrusions form narrow cylindrical bodies called pipes and only a very small proportion have significant diamond content. When pipes are eroded, liberated diamonds can accumulate in alluvial deposits and may be found far from their source 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.

Australia's Economic Demonstrated Resources (EDR) decreased by 6% in 2008 for both gem/near gem and industrial to 91.9 million carats (Mc) and 95.7 Mc respectively. This resulted from reduced production at the Argyle mine in Western Australia (WA).

All diamond EDR is accessible for mining.

The Joint Ore Reserve Committee (JORC) Code reserves account for almost all 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.

Australian Bureau of Statistics data indicate that expenditure on exploration for diamond in Australia in 2008 was $17 million, down 6% on 2007. Exploration continues to be concentrated in WA, notably the Kimberley region, and in the Northern Territory.

Australia produced 15.7 Mc of diamond in 2008, 3.6 Mc less than in 2007 and about half of what has been produced during a number of prior years. Production was almost entirely from Rio Tinto Ltd's Argyle mine, which produced 15.1 Mc and has been recognised as the world's largest supplier of diamonds accounting for one-fifth of world natural diamond production. Argyle production is mostly industrial and cheap diamonds with an average price of US$15-16 per carat. Longer term production is expected to be about 60% of Argyle's historical annual average of 34 Mc as the open pit winds down and underground production ramps up.

Based on United States Geological Survey (USGS) data for other countries, Australia’s EDR of industrial diamond ranks third with 16% of current world total EDR after the Democratic Republic of the Congo (Kinshasa) (26%) and Botswana (22%). 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 after Russia, Botswana, Congo and Canada. As a producer of gem/near gem diamond, Australia is the fifth largest after Botswana, Russia, Canada and Angola. For industrial grade diamond, Australia is the fifth largest producer after Congo, Russia, South Africa and Botswana.

Argyle (WA): At the end of 2007, the AK1 pit experienced a wall failure, which significantly reduced ore volumes from the mine. As a result, lower grade stockpiled ore was processed through the recovery plant. Diamonds recovered decreased to 15.1 Mc in 2008 from 18.7 Mc in 2007. In January 2009, Rio Tinto Ltd announced that, in response to weakening demand and prices, the Argyle underground mining project was being slowed to critical development activities by reducing the project workforce. Full production from the underground block cave mine is expected to be delayed by two years and will not take place until 2013. Rio Tinto Limited intends to operate the open pit mine through to 2011, with reduced production in the short term. Mining will continue in the southern end of the pit to extract the remaining economic ore during 2009. Subsequently, mining is expected to move to the Northern Bowl and continue until ore is available from the underground mine. Processing in the surface operations is expected to be suspended for up to three months during 2009. The extended processing plant shutdown will provide an opportunity to perform essential maintenance, training and improvement activities to ensure processing resumes at a sustainable rate.

Ellendale (WA): Gem Diamonds Ltd reported that during 2008 it achieved targets of higher tonnage throughput and reduced cash costs. Production reached 0.589 Mc in 2008, up 24% on 2007 and 8.3 million tonne (Mt) of ore was treated. The strength of the Australian dollar relative to the US dollar and the high price of fuel impacted costs. These cost factors were reduced in the second half of 2008. However, from October 2008 diamond prices suffered a dramatic slide with rough diamond prices dropping to around 50% of prices prevailing in early 2008 and some categories experienced declines of up to 70%. Despite this, Ellendale managed to achieve an average US$185/carat for 2008 compared with US$137/carat in 2007. The Ellendale mine has two lamproite pipes on which mining has taken place to date -the Ellendale 4 and the Ellendale 9 pipes. In November 2008, production from the lower value Ellendale 4 pit was curtailed and limited to treating ore that was in stockpile or accessible for mining within the confines of the existing pit shell. Subsequently, mining operations ceased at the Ellendale 4 pipe and were placed on care and maintenance. Mining at the Ellendale 9 pipe continues. The Ellendale mine is the world's leading producer of fancy yellow diamonds. In August, the mine entered into a sales agreement with a high end US jewellery manufacturer and retailer for its entire fancy yellow production.