Pink Diamond Prices Could Surge With Closure Of World’s Largest Diamond Mine

Rio Tinto will be shutting down operations at the world’s largest diamond mine, which is famous for its rare pink and red diamonds.

Production will halt before the end of next year at Rio’s Argyle mine located in Western Australia about 1,600 miles northeast of Perth, Bloomberg quoted the company’s head of copper and diamonds Arnaud Soirat as saying on Friday.

The reason for the closure is the exhaustion of economically viable gems at the site, the company said.

“There is going to be a fair bit of supply which is going to come out of the market,” Soirat said. “In late 2020 we’ll be stopping operations and will start the rehabilitation of the site.”

The closure of the mine, which has been in operations for almost four decades, could see diamond prices surge.

“The rational offset between supply and demand should lead to price growth,” Stornoway Diamond Corp. CEO Pat Godin told Bloomberg back in March.

The Argyle mine produces around 90% of the world’s pink diamonds, which are the most expensive gems on the market.

“In terms of the pink diamonds, the impact [of the mien closure] is going to be even more dramatic,” Soirat said. “You can imagine the laws of supply and demand will apply, and you can imagine the impact that will have on those very rare pink, red, blue and purple diamonds.”

On top of that, the Argyle mine is also the world’s biggest diamond producer by volume, largely accounting for low-value diamonds.

It is estimated that existing supply will shrink by about 21 million carats by 2023, according to the world’s largest diamond producer Russian Alrosa, with unfilled demand being somewhere between 11 million and 35 million carats.

The World’s Biggest Diamond Mine Is Closing

About 90% of pink diamonds—some of the world’s most expensive gems—are found there

Argyle Pink Diamonds

The world’s biggest diamond mine⁠—famed more for the fistful of coveted pink and red gems it yields each year than being a major producer of lower-quality stones—is being shuttered by Rio Tinto Group after almost four decades. Rivals from Russia to Canada hope that can help turn around the beleaguered industry.

Rio’s Argyle mine in remote Western Australia has transformed the sector since 1983 when the operation began supplying gems for both ends of the market. RBC Capital Markets and Panmure Gordon are among brokers, banks and competitors forecasting the closure could kick-start prices that have waned since 2011, according to PolishedPrices.com, an industry data provider.

Argyle Mine

Production at Argyle, about 2,600 kilometers (1,600 miles) northeast of the state capital Perth, is scheduled to end before the end of next year after finally exhausting its supply of economically viable stones, said Arnaud Soirat, Rio’s head of copper and diamonds.

“There is going to be a fair bit of supply which is going to come out of the market,” Soirat said in an interview Friday at the mine site. “In late 2020 we’ll be stopping operations and will start the rehabilitation of the site.”

Argyle is best known as the source of about 90% of the world’s prized pink diamonds—rose-to-magenta hued stones that command among the sector’s highest prices. Sotheby’s auctioned the 59.6 carat “Pink Star”, mined by Rio’s rival De Beers, for $71 million in April 2017, a record auction price for any gem. While they attract most attention, the pink stones account for less than 0.01% of Argyle’s total output.

Diamond Kings

Rio is the third-largest diamond producer by output, according to Bain & Co.

The mine also is the biggest diamond producer by volume and that’s what has put the operation at the center of global oversupply. More than three-quarters of Argyle’s output is composed of lower-value brown diamonds, and the mine’s overall output sells for an average of between $15-$25 a carat, Canaccord Genuity Group Inc. estimated in 2017. That’s far less than the $171 a carat average price realized last year by De Beers.

A glut of cheap and small diamonds has eroded profits for nearly every miner and made it increasingly hard for the industry’s cutters, polishers and traders to make a profit. In December, some of Rio’s customers refused to buy cheaper stones, while De Beers has been forced to cut some prices and offer concessions to buyers.

Argyle Mine

Yet, with consumer appetite for diamonds stable, and major mines including Argyle scheduled to shutter, “the rational offset between supply and demand should lead to price growth,” Stornoway Diamond Corp. Chief Executive Officer Pat Godin said in March. Declining output, led by Argyle’s closure, will help revive prices, Toronto-based producer Mountain Province Diamonds Inc. said in May.

About 21 million carats a year of global diamond production—including about 14 million a year from Argyle—are scheduled to exit the market by 2023, a volume that’ll only partially be offset by the addition of new mines, according to Russia’s Alrosa PJSC, the world’s diamond biggest producer. The shortfall between annual demand and supply could be between 11 million and 35 million carats by 2023, the company said in a presentation last month.

Less Than Sparkling

Diamond prices have fallen from their high in 2011

“In terms of the pink diamonds, the impact is going to be even more dramatic” from Argyle’s closure, Rio’s Soirat said in the interview. “You can imagine the laws of supply and demand will apply, and you can imagine the impact that will have on those very rare pink, red, blue and purple diamonds.”

The producer estimates Argyle has only about 150 colored diamonds of sufficient quality left to extract and make available for its annual tender, a sale to invited buyers that showcases 50-to-60 of the year’s most valuable gems, he said.

Argyle Mine

Prices of pink diamonds have already as much as quadrupled over the past 10 years, and buyers are “now just waking up to the potential impact that Argyle’s closure will have” in lifting values further, said Frauke Bolten-Boshammer, proprietor of Kimberley Fine Diamonds, a retailer based in the town of Kununurra, about 200 kilometers north of the mine. She has traded the gems since the 1990s.

Overall, the diamond sector probably also needs a boost to downstream demand, according to Richard Hatch, a London-based analyst at Berenberg. Mine closures that tighten supply “will help, but is it the shot in the arm that the industry really needs? Probably not,” Hatch said.

Buyers have been hit by a shortage of finance and stagnant end markets, while a weaker rupee has made gems more expensive for Indian manufacturers, who cut or polish about 90% of the world’s stones.

The closure of Argyle will remove about 75% of Rio’s diamonds output, yet the impact on the producer’s earnings will be negligible. Diamonds bring in only about 2% of earnings, while iron ore—the company’s top commodity⁠—accounts for almost 60% .

Rio in 2016 shuttered the Bunder development project in India and in 2015 exited the Murowa mine in Zimbabwe. The producer’s only other producing diamond asset, Diavik in Canada, is scheduled to close in 2025, though exploration work is continuing to potentially extend that site’s life, Soirat told reporters Friday at Argyle.

Still, the company aims to retain a presence in the sector. While it could consider acquisitions to add new output, Rio’s main focus is on exploration⁠—an option that’ll take longer to deliver new output growth. Work is advancing on the Fort a la Corne project in Saskatchewan, a joint venture project that potentially could enter production within five to 10 years, Soirat said.

Diamonds is “not a big business in Rio, however it is a very profitable business,” he told reporters, adding that the company has advantages in the sector that it can look to continue to exploit, including technical expertise and branding. “It’s not a commodity, it is luxury goods, and so the market dynamics are completely different.”

Argyle Pink Diamonds

Source:Bloomberg.com

Introducing the Argyle Diamond Bond

Introducing the Argyle Diamond Bond

The Argyle Diamond Bond is the only officially licensed bond available in the UK that is fully backed and secured by rare Argyle Diamonds from the Argyle mine in Australia. Argyle pink diamonds are among the rarest commodities on the planet and their price has appreciated by an astonishing 10% per annum over the last 10 years. With the Argyle mine, currently the largest producer of pink diamonds in the world, scheduled to close in less than a year, pink diamonds are likely to become extremely limited in supply and their value is set to skyrocket even further.

We are offering investors an incredible opportunity to capitalize on the rising demand for pink diamonds by offering them the chance to invest in our Argyle diamond bonds. Due to the incredible rate at which pink diamonds are appreciating in value, we are able to offer fantastic interest rates as well as flexible investment terms of 6, 9 and 12 months. Our short-term bonds are available with invest terms of as little as 6 months making them an ideal option for investors looking for a quick return.

Introducing the Argyle Diamond Bond

The investment terms are as follows:

Our 6-month bond pays an interest rate of 10% with payments being paid on a quarterly basis, directly into your bank account

Our 9-Month Bond pays an interest rate of 11% with payments being paid on a quarterly basis, directly into your bank account

Our 12-month bond pays an annual interest rate of 12% with payments being paid on a quarterly basis, directly into your bank account

All of our bonds are EIS approved under the government Enterprise Investment Scheme which provides certain tax reliefs to investors who invest in UK companies. For more information on what you may be entitled to under the EIS scheme and for further information on our Argyle bonds please visit our website www.theargylegroup.co.uk.

Coloured diamonds – How to invest

Coloured diamonds are one of the most rare and beautiful gemstones on the planet. Of all the diamonds that are unearthed each year, only one in every ten thousand is an investment grade coloured diamond. Unlike other precious commodities such as gold and silver however, diamonds are notoriously hard to value and there are several factors that investors should take into account before deciding on whether to invest. To help you understand the basics, we’ve put together a simple guide on how to invest in these rare and precious gemstones.

Understanding the four C’s

All diamonds are graded based on the four c’s; colour, cut, clarity and carat weight. When it comes to valuing coloured stones, colour is a much more important factor to take into account than if you were grading a colourless stone, however all of the four c’s need to be considered. Typically, when grading a coloured diamond, a high clarity diamond, (one with very few visible flaws) and a high intensity, vivid coloured stone will be worth much more than a low clarity diamond with a duller hue. The size of the stone (Carat weight) and the desirability of the cut are also important factors

Which colours are considered the rarest?

The most common colours of diamond are black, brown and yellow. These are considered entry level stones are generally much cheaper than other coloured stones. Yellow diamonds that have a particularly intense, or vivid colour are highly sought after however, and can sometimes fetch prices on a par with much rarer coloured diamonds such as green or blue stones.

Mid to high price range stones include high quality yellow and orange stones, whilst the rarest coloured stones are green pink and blue. These are considered particularly rare and desirable stones in these colours can fetch prices upwards of £100,000. Fancy vivid red diamonds are the rarest diamonds of all, and only a handful of investment grade fancy vivid stones have ever been seen at public auction.

Certification

When investing in coloured diamonds, you should always make sure that any stones you purchase have been graded by a recognized diamond grading authority such as the GIA, EGL or AGS. This way you can be sure your diamond is the genuine article and exactly as specified. It is also important to acknowledge the differences between grading authorities as each authority has their own criteria for grading and two diamonds that are graded the same by two different authorities may not necessarily be the same quality.

Investing in Argyle Bonds

Bonds are an attractive investment for several reasons. Not only do they come with less risk involved as you are guaranteed an agreed amount of money over a specified period of time, but they also tend to provide a much higher rate of returns than if you were to keep your money in a high yield savings account. There are many companies that offer corporate bonds at varying rates of interest but here at the Argyle Group we like to think we provide something totally unique. The key reason being that all of our bonds are secured by rare and precious gems sourced from the famous Argyle diamond mine. The mine is renowned for being the largest supplier of coloured diamonds throughout the world and is currently one of the only known sources of pink diamonds. With the Argyle Mine expected to shut in 2020, the value of Argyle pink diamonds has risen considerably over the last few years with the high performing gem appreciating by over 10% per annum over the last decade. It is this staggering price clime that has meant we are able to offer exceptional dividend rates with our Argyle Bonds. Currently there are 4 different options available to investors. For longer term investors we offer 3-year options, 4-year options and a 5-year option with dividends of 10-12% paid out quarterly. We now also offer a six-month bond which is perfect for first time investors who wish to dip their toe in the waters. This bond pays out two quarterly dividends at a rate of 5% and has proven extremely popular with new investors who are looking for relatively quick returns with very low risk involved. If you wish to find out more about our Argyle Bonds you can do so by heaving to our website at www.argylebonds.co.uk.

Why the Argyle Bond Represents an Ideal Investment for First Time Investors

For first time investors, choosing the right investment in which to place your hard-earned money can be a difficult decision. There are lots of considerations to think about such as the amount of returns you expect to make, how soon you want to be able to withdraw your money and the risks associated with each investment, Traditionally the most common investments tend to be stocks, shares and bonds which which are all solid choices for first time investors, however your overall goals and what you are looking to achieve from your investment will ultimately determine what option you go for. Whilst stocks and shares can provide potentially very high returns in a relatively short amount of time there is a much larger risk factor attached to them when compared with bonds, which tend to come with less of a risk factor but can also be a much longer term investment meaning they are less liquid should you want to with withdraw your money quickly.

Diamond investments Vs Gold

When it comes to investing in precious commodities, two investments stand out above all others. Diamonds and Gold. Gold has been traded for centuries and has stood the test of time as both a reliable and relatively risk-free investment however, diamonds, in particular coloured diamonds, have proved to be a canny investment choice for investors looking to make large scale returns in a relatively short amount of time. Both assets have similar advantages as an investment, for example they both act as a hedge against inflation and they are both finite resources meaning they have an actual value as opposed to stocks and shares which are wholly reliant on the market to determine their worth. They are also both easily stored and fairly portable should you need to transport the goods or take them with you which is an important consideration when deciding where to invest your money. In terms of liquidity however, Gold holds up far better as an investment choice. Gold is traded everywhere in the world and can be traded fairly easily whereas diamonds are much harder to value and can be difficult to sell on the open market.

If you were to measure both assets in terms of the risk involved, then most experts would recommend gold as an investment. It is currently very difficult to predict the true value of coloured diamonds as there is no real market price. Most coloured diamonds are sold via private auction and their value is based on individual criteria such as cut, clarity and colour. This makes diamonds a much riskier investment. However, with great risk comes great reward and coloured diamonds have the potential to provide much greater returns than gold. Not only are they considered rarer and considerably more scarce, (Only one diamond in every 10,000 is a coloured diamond) but supply is also running out much faster due to escalating mining costs and dwindling resources. The Argyle mine in Australia is currently the biggest supplier of coloured diamonds in the world and responsible for 90% of total pink production. The mine is scheduled for closure in 2020 making these precious gems highly sought after among investors. In the last decade coloured diamonds have continued to appreciate in value year on year making them a much less volatile investment than gold which has fluctuated in value dramatically. Pink diamonds have appreciated by an incredible 10% per annum making them a particularly sound invest choice. When deciding where to invest your money, you should look at your investment goals and what you’re looking to achieve from an investment perspective as there are pro’s and con’s to both.

Diamond market harder to value

Gold more liquid

Harder to invest in diamonds – need to know about the four c’s

Diamonds hold their value better

Why diamonds are a rock-solid investment choice

With high street banks continuing to pay poultry interest rates and traditional markets now riskier than ever following tumultuous Brexit discussions, where are the best places to invest your hard-earned money?  Over the last few years we have seen investors increasingly turning their attention to alternative investments, an umbrella term for luxury investments such as watches, fine art, vintage cars and property. Whilst alternative investments are considered riskier than more traditional investments such and stocks and shares, they have the potential to provide much higher returns and there is an enjoyment factor that comes with investing in something tangible that sets alternative investments apart. 

One alternative investment that has seen a surge in popularity over the last 10 years is coloured diamonds. Coloured diamonds have long been perceived as one of the rarest and most precious commodities on the planet, currently accounting for less than 0.1% of the world’s total diamond production, however their increasing rarity due to dwindling resources and high profile mine closures has seen these precious gems significantly increase in value. The Knight Frank Wealth report now includes coloured diamonds on their wealth index and estimates their value has risen an impressive 167% since 2005. When taken on their own pink diamonds are said to have appreciated in value by more than double that figure, no doubt helped in no small part due to the news that the Argyle mine, currently responsible for 90% of pink diamond production, is set to close in 2020.

With these finite resources growing ever rarer and demand continuing to grow, the value of coloured diamonds shows no signs of slowing of down. It’s not just collectors that are interested in buying these stones either, but also high net worth investors who in the past tended to opt for more traditional investments such as stocks and bonds. Over the last few years, coloured diamonds have dramatically risen to the public’s attention with several high-profile auction sales making headlines in the media. These incredibly rare and precious stones continue to excite and entice investors, with many of them selling for increasingly high prices. In 20 the “Pink Star” became the most expensive diamond ever to sell at auction, when it was sold for $71.2 million at Sotheby’s Magnificent Jewels and Jadeite Spring Sale. The beautiful 59.60 carat pink diamond is the largest pink diamond of its colour grade and quality ever discovered.

Other notable auction sales in recent years include the 100.09 carat Graff vivid yellow diamond, which became the most expensive yellow diamond in history when it sold for $16.3 million, and the 14.62 carat Oppenheimer blue diamond, which broke all records at the time of its sale, making an incredible $57.5 million at auction.

Australia’s Biggest Diamond Mine is Running out of Diamonds

    • The closure of Argyle Diamonds will knock 10% off the annual world diamond output.
  • This is expected to help keep diamond prices higher and encourage new exploration.
  • Among the contenders to develop a new diamond source in Australia is Lucapa’s Little Spring Creek in Western Australia’s West Kimberley.

Colored Diamonds Expected to Shine in 2019

Colored diamonds, which have natural pink, blue, yellow, and other brilliant hues, will continue to be closely sought-after by collectors and investors in 2019, according to Russian diamond group Alrosa.

“Colored diamonds appreciate even in turbulent times against the backdrop of instability of the world economy,” says Yuri Okoyemov, vice president at Alrosa, the world’s largest diamond mining company by volume. “We expect fancy diamonds to become ever more popular investments in the near future.”

Alrosa auctions colored diamonds twice a year. Last September, its “True Colours” auction in Hong Kong sold a total of US$9 million worth of colored diamonds.

Tracked by Knight Frank as one of 10 luxury investment assets along with jewelry in general, art, wine, watches, and cars,  the value of colored diamonds has appreciated 70% in the last decade, or about 12% every year, according to The 2018 Knight Frank Luxury Investment Index.

During the third quarter last year, the last period for which data is available, overall fancy color diamond prices grew 0.4% from the year before, according to the Fancy Color Research Foundation, an Israel-based diamond market information provider. Fancy vivid blue diamonds continued to outperform other kinds, rising 8.5% during the same period of time. 

While all fancy pink diamonds gained only 0.5% in value in the third quarter of 2018, their valuations will likely grow faster in the coming years due to an expected shortage of supply, according to Okoyemov.

The Argyle Diamond Mine in Australia, a source of over 90% of pink diamonds in the world, is set to close by 2020.

Rare fancy pink diamonds have also set records at auction in recent years.

Last November, a 18.96-carat rectangular fancy vivid pink diamond, The Pink Legacy, fetched US$50.4 million at Christie’s Geneva, setting a  record price per carat for a pink diamond sold at auction, at US$2.6 million. 

In 2017, The Pink Star, a 59.60-carat fancy vivid pink diamond fetched US$71.2 million at a Sotheby’s auction in Hong Kong. It retained the title of most expensive pink diamond in the world. 

Also in 2017, Christie’s Hong Kong sold The Pink Promise, an oval-shaped, 14.93-carat fancy vivid pink diamond, for US$32.5 million, or US$2.2 million per carat.

Yellow diamonds saw their overall value rise 1.6% in the third quarter of 2018, according to the Fancy Color Research Foundation. 

Only one in every 10,000 gem-quality diamonds has natural color. Depending on the intensity of the colors, colored diamonds can be even more valuable than white (or colorless) diamonds, which are considered to be of the highest quality.