De Beers is Looking for New Deposits of Diamonds

Sales of diamond jewelry for the last year weren’t stable, with vivid jumps during festive season and predictable falls during off-season. One would think the situation is quite stable in its instability, though De Beers are having views in advance. The company expects that global demand for diamonds will raise in the nearest time so it’s crucial to explore new deposits of diamonds otherwise the lack of natural diamonds can be easily compensated by synthetic diamonds. This can be devastating for diamond mining companies, though beneficial for the customers and environment. To find more about why the demand for precious stones is growing and who are the potential customers, read the information below:

This year leading diamond producer De Beers said it expects global demand for gems to rise by 4.5 per cent, fuelled by demand from emerging markets. Demand is also being helped by improved credit conditions in India, the world’s biggest diamond polishing market.

Against that backdrop, quoted producers Gem Diamonds and Petra Diamonds have both seen strong growth in their share prices.

This month Gem Diamonds announced the opening of the Ghaghoo diamond mine in Botswana, which will be the first underground diamond mine in the country, a move the company described as a significant milestone. Analysts at FinnCap have a buy rating on the shares with a 261p price while Panmure Gordon raised its target on the shares to 256p recently, compared to last week’s price of around 210p.

Shares in Petra Diamonds were also in demand last week after it announced a major find from its Cullinan mine in South Africa.

Petra said the 232 carat ­diamond is of “exceptional size and clarity”. Although the company did not provide an estimated sale price for the diamond, analysts at Westhouse believes it could be worth up to $15m.

The broker upped its recommendation for the shares from “add” to ‘buy’ after the announcement.

Westhouse has a 230p target price on the shares which were trading at around 200p at the end of last week.

Analysts at Numis, who place a similar valuation on the stone, were also bullish about the find. “The extra revenue would go straight to the bottom line,” they noted.

This information was taken from http://www.scotsman.com/business/shares-watch-demand-for-diamonds-grows-1-3540993

Now about the threat of synthetic diamonds to natural ones:

The search for fresh, large sources of diamonds in ancient volcanic deposits known as kimberlites must be stepped up because there is a potential threat to the diamond market from synthetic diamonds if the supply of natural diamonds cannot keep up with demand.

There has not been a discovery of a major kimberlite for nearly 30 years, De Beer’s head of exploration Charles Skinner said on Friday.

“The reason for the significant volume of diamonds produced in the period between 1970 to present is because of the feedstock from these significantly large diamond mines that were discovered in that period,” he said. “There’s been massive depletion and it begs the question where will diamonds come from in the future.”

Speaking at the Kimberley Diamond Symposium hosted by the Geological Society of SA, Mr Skinner said kimberlites were easy to find but deposits that had enough diamonds to make them economically viable as a mine were extremely rare.

More than 8,000 kimberlites have been found, but only 67 had enough diamonds to justify the economics of establishing a mine, he said. Of those mines, just seven were major mines like Jwaneng and Orapa in Botswana and Venetia in SA, generating 65% of global rough diamond production by value, he said.

Shameful

There was a period between the 1970s and 1990s when there was a relatively large number of kimberlites discovered and brought into production, said Mike de Wit, the president of Tsodilo Resources and a 29-year veteran of De Beers’ exploration division. While the 1990s marked a high point in the discovery of diamondiferous kimberlites it was in the 1970s that the largest kimberlites were found, he said at the conference.

The size of kimberlites has tumbled to an average of just 2ha from more than 30ha in the 1940s.

“It’s shameful that we’ve not been able to keep that level of discovery going on,” Mr de Wit said, adding there were few places in the world to find kimberlites. “The decline in rough diamonds is a reality and the life of mine for new projects is pretty short, 10 or 12 years. We see some new projects coming on stream but they won’t have the impact that a big mine would have,” he said.

After 2018 output starts declining, opening the gap between supply and growing demand.

“This gap is a reality. I don’t think it will do the diamond industry any good. It will open a feed for synthetics and recycling. We really have to work very hard to try get a new deposit on the table to get some of that production back on line,” he said.

Red tape

The feeling at the symposium was that the easily found kimberlites had largely been discovered and there were kimberlites still to be found. Exploration has to target areas covered by thick layers of sand and rock, utilising the best in technology to work quickly through prospecting packages to find buried kimberlites, Mr Skinner said, adding regulatory red tape, slow bureaucratic processes and country risk were important factors to consider.

Finding a kimberlite is a relatively quick and cheap process, he said, but it is the cost and time of evaluating the deposit for adequate diamond grade and quality that is a major hurdle. It could take a year to assess a 3,000ha land package, returning it to the state if nothing of consequence was found.

De Beers CEO Philippe Mellier told Business Day recently that he was willing to spend money on diamond exploration, but the difficulty was the speed at which land packages in SA and Angola, two highly prospective countries, could be secured.

“I would be delighted to spend more. The problem is to have areas where we can explore and spend money,” he said.

This information was taken from http://www.bdlive.co.za/business/mining/2014/09/15/finding-new-deposits-of-diamonds-crucial

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