The State of Global Rough Diamond Supply 2014

Based on the analysis below, 135 million carats of rough diamonds, valued at $17.8 billion, will be mined in 2014, which would represent an increase of approximately 3% over 2013 estimates. The 50 mines itemized below are estimated to account for 90% of global rough diamond supply in 2014, with the balance coming from private or small-scale operations, where production data is unreliable or not available at all.

The Marange diamond fields, a 300 square-mile alluvial deposit in Zimbabwe, was ranked the worlds largest source of diamonds in 2013 in terms of total carats produced, estimated to have produced almost 17 million carats or 13% of global supply. However, It appears that 2013 production levels will not be sustained in 2014 as grades have decreased and easily minable loose gravel has been rapidly depleted leaving more difficult-to-mine conglomerate stone. While Marange is a relatively new project with formal mining commencing only 5 years ago, alluvial projects like Marange tend to have a much shorter life span than open-pit or underground diamond mines, as the economic resource is limited to the easily accessible surface stones; mining deeper solid conglomerate rock is not economic in a lot of cases. None of the 7 private companies operating in Marange provide specific production guidance, but representatives of the companies have publically expressed frustration with decreased operating economics resulting from depleted resource. In 2014, Marange production is estimated to drop to 8-12 million carats or less.

In 2013, Botswana’s Orapa mine was the worlds largest diamond mine in terms of total value of carats produced. In 2014 Orapa is again estimated to be the worlds largest by value estimated to produce $1.9 billion worth of diamonds. In 2014, the Orapa mine is also estimated to be the worlds largest in terms of carats produced with 12.9 million carats. De Beers' and Botswana's joint venture portfolio, Debswana, realized a 17% increase in production in Q4 2013, highlighted by higher grades realized at Orapa and the Orapa One processing plant resuming operations following unplanned maintenance in Q3 2013.

Australia’s Argyle mine, known as the worlds largest producer of fancy colored diamonds, including elusive pink and red diamonds, is estimated to produce 12.6 million carats in 2014, making it the second largest diamond mine in the world in terms of carats produced. While Argyle has a history of producing some of the most precious colored diamonds in world, unpopular brown diamonds, most of which are classified as industrial quality, account for the majority of Argyle’s production making the mine's average carat value produced among the lowest in the world.

The Russian government-run super-major ALROSA has 9 primary diamond mines, 10 alluvial mines, and 2 mines in development, accounting for approximately 95% of all Russian diamond production. ALROSA’s mines represent 8 out of the top 15 largest producing diamond mines in the world in terms of carats produced. ALROSA’s Jubilee and Nyurbinskaya mines are both estimated to produce over 9 million carats in 2014 making them the fourth and fifth largest projects in the world according to 2014 projections.

Jwaneng, the second largest diamond mine in Botswana, is nearing completion of the Cut-8 expansion, which will extend the mine life to at least 2025. Cut-8 will provide access to approximately 95 million carats of high quality diamonds, making Jwaneng the most valuable diamond reserve in the world. Jwaneng successfully recovered from a slope failure in Q2 2012, and is estimated to produce over 9 million carats of diamonds worth $1.3 billion in 2014.

Venetia, South Africa’s largest diamond mine realized a production increase of 57% in Q3 2013, on higher volumes and grades following recovery from flooding earlier in the year. A plan to convert Venetia to an underground mine received environmental approval in October 2013 and the project build is scheduled to commence shortly, which will increase the mine life beyond 2040. Venetia is estimated to produce over 3.5 million carats in 2014 with production valued at over $500 million.

Lesotho, a landlocked country within South Africa, is home to the Letseng mine, which has a history of consistently producing the most valuable diamonds in the world on an average per-carat basis. Letseng is estimated to produce only 110,000 carats in 2014, but the average price of carat produced is estimated to be around $2,200, which is significant considering the global average price per-carat of rough produced is around $130.

2014 will mark the first full year of production at Russia’s Grib mine. Estimated to produce 4 million carats annually once fully ramped up, Grib has a reserve of approximately 75 million carats and a mine life of approximately 20 years. Currently owned by Russian oil-major LUKoil, the company has publicly expressed interest is selling the asset, which lies outside of the oil company’s core strategy.

Botswana’s Ghaghoo mine is expected to commence production in the second half of 2014. Once production is fully ramped up, Ghaghoo is estimated to produce 750,000 carats annually worth an estimated $200 per carat.

The most anticipated diamond development project in the world, Canada’s Gahcho Kué, continues to move forward as permitting is expected to be approved in the second half of 2014, with mechanical completion of the processing plant and cold commissioning anticipated to start as early as 2015. Once fully ramped up, Gahcho Kué is estimated to produce 5 million carats of diamonds annually worth an estimated $185 per carat.

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Notes:

Projects highlighted in blue are not yet in production, and are sorted by estimated production commencement date.

(A): Denotes alluvial deposit.

C&M: Denotes mine is currently under care and maintenance and production is suspended.

Project Name: Name of project.

Project Location: Location of project by country.

Production Carats: 2014 estimated production for project in terms of carats produced.

Production US$ MM: 2014 estimated production for project in terms of millions of U.S. dollars generated. Calculated as (estimated production in carats * estimated average carat price), represented in millions of dollars (i.e $1,877 = $1,877,000,000).

LOM Years: Life of mine in years of remaining production. Calculated as (estimated reserve / estimated annual production)

Project Ownership: Number corresponding with detail of project ownership below:

[1] De Beers (50%), govt. of Botswana (50%)

[2] Rio Tinto (100%)

[3] Various owners, see detail here

[4] ALROSA (100%)

[5] ALROSA (100%)

[6] De Beers (50%), govt. of Botswana (50%)

[7] ALROSA (32.8%), govt. of Angola (32.8%), LLI (18%), Odebrecht (16.4%)

[8] ALROSA (100%)

[9] Rio Tinto (60%), Dominion Diamonds (40%)

[10] ALROSA (100%)

[11] ALROSA (100%)

[12] De Beers (74%), Ponahalo Holdings (26%)

[13] ALROSA (100%)

[14] ALROSA (100%)

[15] ALROSA (100%)

[16] Petra Diamonds Ltd (74%), Senakha (21%), Petra Employee Trust (5%)

[17] De Beers (50%), govt. of Namibia (50%)

[18] De Beers (100%)

[19] Dominion Diamond Corp (80%), Stewart Blusson and Charles Fipke (20%)

[20] Petra Diamonds Ltd (74%), Thembinkosi (14%), Petra Employee Trust (12%)

[21] De Beers (50%), govt. of Botswana (50%)

[22] Severalmaz (ALROSA/Arkhangelsk) (100%)

[23] ALROSA (100%)

[24] De Beers (100%)

[25] ALROSA (100%)

[26] De Beers (74%), Ponahalo Holdings (26%)

[27] De Beers (74%), Ponahalo Holdings (26%)

[28] LUKoil (100%)

[29] Lucara Diamond Corp (100%)

[30] Rio Tinto (78%), Riozim (22%)

[31] De Beers (50%), govt. of Namibia (50%)

[32] De Beers (50%), govt. of Botswana (50%)

[33] De Beers (50%), govt. of Namibia (50%)

[34] ALROSA (100%)

[35] Petra Diamonds Ltd (75%), govt. of Tanzania (25%)

[36] Kimberly Diamonds Ltd 100%

[37] Petra Diamonds Ltd (74%), Sedibeng (26%)

[38] Namakwa Diamonds (62.5%), govt. of Lesotho (25%), local investors (12.5%)

[39] Kimberly Diamonds Ltd 100%

[40] Octéa Diamond Group/Beny Steinmetz (100%)

[41] Gem Diamonds Ltd (70%), govt. of Lesotho (30%)

[42] Endiama (67%), Trans Hex (33%)

[43] De Beers (50%), govt. of Namibia (50%)

[44] Trans Hex (100%)

[45] Rockwell Diamonds Inc & various owners

[46] Petra Diamonds Ltd (74%), Re-Tang (26%)

[47] Merlin Diamonds (100%)

[48] Gem Diamonds Ltd. (100%)

[49] Diamcor Mining Inc (70%), Nozala Investments (30%)

[50] ALROSA (100%)

[51] Lucara Diamond Corp (75%), govt. of Lesotho (25%)

[52] Trans Hex (100%)

[53] Mwana Africa Plc (65%), Naka Diamond Mining (35%)

[54] Firestone Diamonds (75%), govt. of Lesotho (25%)

[55] Petra Diamonds Ltd (74%), Sedibeng (26%)

[56] Firestone Diamonds (90%), local investors (10%)

[57] De Beers (51%), Mountain Province Diamonds (49%)

[58] DiamondCorp (74%), Sphere (13%), Shanduka (13%)

[59] ALROSA (100%)

[60] Stornoway Diamond Corp (100%)

[61] Rio Tinto (100%)

[62] Star: Shore Gold (100%); Orion: Shore Gold (67%), Newmont Mining Corp (33%)

[63] Severalmaz (ALROSA/Arkhangelsk) (100%)

[64] Peregrine Diamonds Ltd (100%)

[65] Lucapa Diamond Co (40%) Endiama (60%)

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This was published in print in the London Mining Journal and The Northern Miner's Diamonds in Canada and online at Kitco and Mining.com. It was referenced by Zimbabwe's The Sunday Mail.

At the time of writing, the author held a long position in Lucara Diamond Corp and Stornoway Diamond Corp, the owner of Karowe and Mothae mines, and the Renard project, respectively.