2. World Production of Natural Diamonds
World natural diamond production for 2003 has been estimated at a total of 144 million carats with a value of US$9.4 billion.
About 20% of this volume are gems, which will be polished and set into diamond jewellery and 45% are near-gem qualities, which would have been graded as industrial 40 years ago but are now polished by the vast low-cost Indian cutting industry. The balance is of industrial quality. Although more than 90% of the industrial diamonds are produced synthetically, there are still some preferred uses of natural stones.
Just 13 years after diamonds were first discovered in the Northwest Territories, there are now two major mines, Ekati and Diavik, on stream. A third, Snap Lake, is in the permitting and licensing phase, having recieved federal approval for its environmental impact report.
In 2003, Canada's Northwest Territories mines produced 11.2 million carats, 7.5% of the world total by weight, worth an estimated value of US$1.24 billion, which is over 12% of the world total by value, making Canada the third largest producer of diamonds in the world, behind Botswana and Russia, surpassing South Africa and Angola.
The Diavik mine, which is 60% owned by Rio Tinto, started producing diamonds at the beginning of 2003, and during the ramp-up phase achieved its targeted 3.8 million carats. Full-scale production will be reached during 2004, and the mine plan has been revised to call for the processing of over 7 million carats. All recoveries so far have been made from the very high-grade A154 South pipe, but a small amount of ore will be mined during 2004 from the slightly lower-grade A154 North pipe. In March 2003, Aber Diamond Company, 40% owners of the mine, announced that the first sale had achieved a price of US$96.22 per carat, well above the US$79 per carat projected in the 1999 feasibility study.
A total of 6.96 million carats were recovered from the Ekati mine, which is 80% owned by BHP Billiton - the highest annual output since the mine opened in 1998. these results were obtained by processing a pocket of high-grade material from the Koala pit, and also represent continuing benefits from the de-bottlenecking program at Ekati's processing plant. The plant is now processing ore at an average rate of 12,000 tonnes per day. During 2003, open-pit operations at the Panda pipe were completed. Mining commenced at the Koala pipe, while mining of the high-grade but lower quality Misery pipe and pilot underground mining project at the Koala North pipe were ongoing.
A large proportion of the gem-quality diamond produced by both the mines in the NWT is in the range of high colour and quality, and in sizes that are most in demand in the world's leading consumer market, the USA.
DeBeers is the largest diamond miner in the world. Its mines in Botswana, South Africa, Namibia and Tanzania produced 41% (est at US$3.9 billion) by value or 31% by caratage (43.9 million carats) of the world's 2003 production. The company's marketing arm, the Diamond Trading Company (DTC), sold 48% of world total production - a steep fall from the recent past when (in 2000) the company's market share was about 60% and the 1970s and 1980s when it was 80%. (DTC also bought US$ 634 million woth of diamonds from Russia during 2003.)
During 2003, DeBeers also sold US$ 700 million from inventory, reducing its stockpile to a minimal working level.
Botswana was again the world's number one diamond-producing country in 2003 terms of value (estimated at US$2.48 billion) and only marginally behind Australia in carats mined (30.4 million carats). The four operating mines are owned by Debswana, a 50/50 joint venture between DeBeers and the Botswana Government. Recovery efficiencies and selective treatment of high-quality ore at the Orapa mine resulted in an increase in output. This more than compensated for a shortfall at the Jwaneng mine due to a fire and technical breakdowns. Debswana is planning to recover 2.6% more caratage in 2004.
South Africa contributed an estimated 12.4 million carats to the world's total production, which represents about 11% by value (US$1.1 billion), 96% of which comes from mines owned by DeBeers. The Venetia mine is easily South Africa's most productive, contributing 6.6 million carats, up 30% from 2002 after treatment capacity was increased. The company improved recoveries at the Kimberley mines where old mine dumps are being reworked.
Namibia now recovers about half of its diamonds from mining the sea bed with the remainder being found on its beaches, which have been swept for alluvial diamonds since 1908. The stones are high in average value, though samll in average size. The Government's 50/50 joint venture with DeBeers, Namdeb, produced 1.45 million carats in 2003, an average of 14% over 2002.
Russia is the world's number two producer of diamonds. All the mines are situated in the Western Yakutia, and are owned by the state company Alrosa, which US$1.6 billion in 2003. At some of the older mines - Mir, Udachny, International and Aikhal - the open pits are almost mined out. Alrosa is investing heavily to mine these deposits underground. The company is also actively prospecting for new diamond deposits in the same region. Alrosa plans a 15% increase in production this year and a further 5% increase, to US$2 billion, next year.
In Russia, half of the rough output is currently sold for polishing and half is exported. Of this, most is sold to the Diamond Trading Company through a five year agreement signed in 2001, although this agreement is still awaiting approval from the European Union Competition Commissioner.
The largest contributor to the formal sector in Angola is the Catoca mine, in which Russia state-miner Alrosa holds a one third stake. Alrosa intends to invest US$85 million in developing the Camatchia and Camagico mines and in building a hydroelectric power plant on the Chicapa River to provide electricity to the new phase of Catoca mine aimed at boosting annual production.
In Australia, the Rio Tinto-owned Argyle mine is currently the largest producer in the worls by volume; however the open pit will reach the end of its life in 2007. A decision has yet to be made whether an underground mine will be developed. Although most of the annual output of 30 million carats are small and of very low quality, the mine is also famous for its very valuable pink stones, which the company polishes and sells annually by worldwide tender.
The only large kimberlite mine in the Democratic Republic of the Congo is Miba, which mostly yields low-quality stones (6.7 million carats in 2003).
Production in both the Democratic Republic of the Congo and Angola has increased, but the actual level is unclear. Both countries have a large informal mining sector. High export taxes and a monopoly buying arrangement in Angola encourages smuggling trough the region's porous borders.
The diamond industry depends on the intrinsic value of natural diamonds and once again, faces threats from synthetically produced gem diamonds and treated diamonds. (Those which have had their colour altered by being exposed to very high temperatures and pressure.)
These stones are legal, but the consumer must be informed if a stone is not entirely natural. The industry invests heavily to maintain consumer confidence in natural diamonds by developing technology to detect synthetic and treated stones. The DTC has supplied the leading gem grading laboratories with detection instruments.
Prices of rough diamonds rose strongly during 2003 in response to the strength of demand. This has created shortages, particularly in high colour and quality stones of over 2 carats. DeBeers has announced that it raised prices three times during the year by 10% in total. Sale prices of Ekati stones were raised by 14% overall.
All the major producers are responding to strong demand by stepping up output where possible, to defend or increase their share in the growing market.
Although new mines are planned to come on stream over the next few years, none are of a size comparable to the two Northwest Territories mines.
Rio Tinto's Murowa mine in Zimbabwe is expected to commence production during 2004 with a planned output of 500,000 carats per year.
Following competition of the environmental review process, the Jericho project in Nunavut is currently awaiting approval of its Environmental Impact Statement from the Federal Minister for Indian and Northern Affairs. After this is received, the owners, Tahera Corporation, can apply for a land-use permit and a water license. It plans to build the mine in 2004 and bring it into production in 2005. The project feasibility study indicated mining 3 million carats over a projected 8-year mine-life.
DeBeers' Snap Lake project in the Northwest Territories gained environmental approval in October, 2003. Subject to recieving a land-use permit and water license, DeBeers plans to start building the mine in 2005 and to produce 1.5 million carats a year from 2007 over a 20-year mine-life.
Similarly, the Victor project in Northern Ontario is expected to grow steadily over the next three years, with Canada retaining the Number 3 position (by value) among the world's top diamond producers, mining between 12% - 15% of the world's diamonds.
www.gov.nt.ca/RWED/diamond/industry.htm