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.
Sometime in the next few years Argyle Diamonds, Australia’s biggest diamond mine and the source of rare and prized fancy pink gems, will come to the end of its life.
The shutdown, and the loss of Argyle’s output of 14 million carats of diamonds a year, will cut world production by around 10% and is expected to create upward pressure on prices.
Argyle has been in operation since 1983, first as an open pit and then from 2013 as an underground operation, producing more than 95% of Australia’s diamonds.
At the end of 2017, the estimated ore reserve was 16 million tonnes, down from 29 million tonnes, a drop of 45% from a year earlier. That translates to 38.5 million recoverable carats, at a grade of 2.4 carats per tonne of ore.
At what point the mine becomes unprofitable depends on prices and costs.
“Shut-off criteria will be reviewed regularly against price, cost performance and demonstrated operational performance,” says owner Rio Tinto in its latest report. “The remaining reserves underpin the operation until 2020.”
The coming shutdown, and the subsequent impact on world supply and prices, hasn’t gone unnoticed. Many prospectors are looking for a new source.