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Prospects for world diamond mining industry

24 july 2018

According to our estimates, global diamond reserves are about 2 billion carats, while diamond resources reach 4.4 billion carats. Taking into account the rather high rates of production (134.1 million carats in 2016), the raw material base of precious stones can be exhausted in little more than thirty years.

Currently, almost 99% of diamonds are mined by nine countries: Russia, the Democratic Republic of the Congo, Botswana, Australia, Canada, Angola, South Africa, Zimbabwe and Namibia. We will consider the prospects of diamond mining for each of them, based on the data provided by mining companies on their output and resources of specific fields, also taking into account the projects for the development of new facilities and planned expansion of the existing mine capacities (Fig. 1). We have managed to collect fairly complete statistics for all the mentioned countries, except for the DRC and Zimbabwe, where local diamond mining companies do not publish the results of their work.

analyt_23072018.png

Fig. 1. Forecast of diamond production based on the resources of major producing countries in 2016-2035, million carats (data sources: company reports and estimates for DRC and Zimbabwe). Inscriptions on the graph, from top to bottom: Zimbabwe, Angola, South Africa, Australia, Namibia, Canada, Botswana, DRC, Russia.

Let's start with Russia, the leader of the world diamond mining, where more than 90% of diamonds are produced by ALROSA. In the next two years, the country expects a small decrease (by 2.5%) in its diamond output caused first of all by the conservation of the Mir mine due to the accident. Nevertheless, starting from the next decade, the country’s diamond production will grow due to the planned expansion of the Udachny underground mine, the Botuobinskaya open-pit mine in the Republic of Sakha (Yakutia) and the diamond pipes being developed on the Lomonosov group of diamond fields in the Arkhangelsk region. However, it is expected that this growth will continue only until 2027, after which, having reached a maximum (about 45 million carats), the production level will decrease first by 5-6% due to the exhaustion of the resources at the Nyurbinskaya and Internatsionalnaya pipes, and by 2031 production will go down by 30% due to possible depletion of the resources at the Yubileinaya pipe, which is currently the main source of diamonds in the country. The drop in production may be even more significant if ALROSA does not implement plans for resuming operations at the Mir underground mine scheduled for 2024.

In the last five years, three large new deposits were commissioned in Russia: the Botuobinskaya diamond pipe in Yakutia, the Karpinsky-1 diamond pipe (which is part of the Lomonosov group) and the Grib diamond pipe in the Arkhangelsk region. Among the significant areas under study there are only three kimberlite pipes of the Lomonosov group (Karpinsky-2, Lomonosov and Pionerskaya), which are planned to be engaged when the resources will start to deplete at the Arkhangelskaya and Karpinski-1 diamond pipes, as well as at the Verkhne-Munskoye deposit in Yakutia, which is a cluster of several pipes. Its commissioning is scheduled for September 2018, but even after reaching full capacity of 3 million tons of ore per year its contribution to the total production of the domestic diamond mining industry will not exceed 2 million carats. Despite the availability of a rich mineral base of diamonds and annual efforts to expand it, the country may exhaust its diamond resources in a quarter of a century at the current level of production.

The Democratic Republic of the Congo (DRC) is a major producer of diamonds in terms of carats, but the value of diamonds mined in the country is very low - $ 8-10 per carat. There are several diamond-bearing areas in the DRC, the largest of which is Mbuji-Mayi, where both primary and placer deposits of diamonds are identified. A considerable proportion of diamonds is mined by artisanal miners; the only major producer of diamonds in the country is Societe Miniere de Bakwanga (Miba), a state-owned company. There are no reliable data on the amount of diamond resources, but by our estimate they can be exhausted by the mid-2020s, as the country's diamond production in general tends to decline.

The basis of Botswana's diamond resources is made up of kimberlite pipes Orapa and Jwaneng having enormous resources, which provide 95% of the country's diamond production. According to the existing mining plan of Debswana, the development of these pipes will be carried out until 2030 and 2034, respectively, but their resource potential will allow diamond production at the current level until 2035 and beyond. Debswana also operates Damtshaa and Letlhakane pipes, which totally produced little more than 600,000 carats of diamonds in 2017. There are three smaller diamond mines in the country: Ghaghoo, Lerala and Karowe, but only the last one is currently operating. In general, the prospects for Botswana diamond mining are determined by the amount of resources at the Orapa and Jwaneng pipes discovered in the late 1960s and early 1970s, since there have not yet been discovered any new diamond fields of similar scale in the country, despite the fairly active geological exploration works.

All the Australian diamonds are mined at Argyle, a pipe composed of olivine lamproites and operated by mining giant Rio Tinto. At the end of 2017, the Argyle mine became the world's largest diamond mining enterprise having produced 17 million carats of diamonds, but the downside was the fast exhaustion of resources - at this level of production, the mine will be completely depleted by 2021. As there are no other significant diamond projects in the country, Australia may leave the group of major diamond producers in the short term.

The diamond mining industry in Canada is dynamically developing after the discovery of primary kimberlite deposits in the Lac de Gra area (Northwest Territories) in the 1990s. Currently, the Ekati and Diavik mines provide about 60% of the country's diamond production. There is a project to prolong the life span of Ekati - which currently has enough resources to continue mining operations up to 2035 - at least to 2042 (the Fox Deep project). Diavik will be exhausted by 2025. The Victor mine will be depleted even earlier - in 2019. It is owned by De Beers Canada, which at the end of 2015 mothballed its Canadian Snap Lake mine due to its low profitability. In 2016, De Beers Canada together with Mountain Province launched a new mine at the Gahcho Kue diamond field, which in 2017 reached its full capacity and provided nearly a third of the country's diamond output. At this level of production (5.9 million carats) the resources of the field will be exhausted by 2030. The annual capacity of the second new Canadian mine based on the Renard diamond field and also launched in 2016 is much smaller - about 1.6 million carats, but its life span is correspondingly longer. Another project is being implemented in the country to develop the Star and Orion South diamond fields, on which it is planned to build a mine with an annual diamond output of 1.8 million carats. The date of its launch has not yet been announced, but it will not happen before 2020. In addition, active geological exploration for diamonds is underway in Canada, which allows us to speak with a fairly large degree of certainty about favorable prospects for the country's diamond mining, even despite its expected decline by 2030.

In Angola, the main source of diamonds is the Catoca kimberlite pipe, whose actual resources are not published, but according to our estimates, they can be depleted by 2025. The depletion may be offset by the planned project for commissioning of a new diamond field, which is Luaxe, implemented by the state-owned company Endiama in team with Russia’s ALROSA. According to ALROSA, the mine will be commissioned in 2022-2023 and after reaching full capacity it will annually produce 8-10 million carats of diamonds. On the territory of Angola, a large number of kimberlite pipes have been identified, and the government is interested in attracting foreign investors and in developing the diamond mining industry.

Approximately half of South Africa's diamonds are now mined at the Venetia diamond field, which is a cluster of several kimberlite pipes. A significant amount of diamonds (1.8 million carats in 2017) is being produced by the Finsch mine, while the remaining volume is almost completely provided by the Kimberley, Cullinan and Koffiefontein mines operating from the late 19th and early 20th centuries. The depletion threat is facing only the Kimberley mine and the Voorspoed mine located on a small diamond field. There is no information on major exploration and development projects within the country.

The "diamond fever" in Zimbabwe, which broke out in 2010 due to the discovery of ancient diamondiferous placers in the Marange area conglomerates and which has led to the growth of smuggling and numerous conflicts, is gradually ceasing. In 2012, the country took the fourth place in the world in terms of diamond production by volume extracting 12 million carats of diamonds, but then, contrary to forecasts of analysts, production began to decline. The reason for this was the depletion of weathered high-diamond-grade rocks and the unwillingness of diamond-mining companies (mainly Chinese) to invest in the development of poorer conglomerates lying at depth. At the beginning of 2016, the new state-owned Zimbabwe Consolidated Diamond Company (ZCDC), which is currently mining diamonds there, received the licenses of the companies that left the country. Most likely, diamond mining in this country will be conducted in limited quantities.

Diamond mining in Namibia, where only placer diamond deposits are known to date, is conducted in relatively small amounts - 1.5-2 million carats per year, however this is compensated by the high quality of the stones produced. The country is developing its coastal-marine land and underwater placers on the Atlantic coast, as well as the alluvial placers in the basin of the Orange river. The major amount of diamond resources in the country, exceeding 100 million carats, is enclosed in the sands of the Atlantic 1 seabed placer.

Thus, by 2035 the world diamond output may be reduced by almost half, and Australia and the DRC may fall out from the list of major diamond producing countries. But the main problem is the forecast decrease in diamond output in Russia, because of which the country risks losing its leading position to its main competitor, Botswana.

Anastasia Smolnikova, Chief Specialist, Solid Minerals Section at All-Russia Research Institute of Mineral Raw Materials