One thousand miles north of the U.S border in Lac de Gras, Canada a remarkable thing has been going on since 1998. They are mining diamonds, and I’m not just talking onesies and twosies but bucket fulls! On any given day, Ekati (first ever Canadian diamond mine) will sift 10,000 tons of Kimberlite (a rock formation in which diamonds are formed) to obtain a sack of 10,000 carats of diamonds (about 4 pounds) valued in excess of one million dollars. What’s even more amazing is where they find these diamonds. They are buried in ice two-thirds of a mile down chilled to a very uncomfortable 70° below zero. At a cost of 600 million dollars BHP Diamond Corporation (Broken Hill Proprietary, an Australian outfit) broke ground with a team of 500 people who live and work on the frozen tundra working in shifts (two weeks on and two weeks off) 365 days of the year including Christmas. To give you some idea how big a diamond find this is, let’s put it into perspective. Every year 30 billion dollars worth of diamonds are mined worldwide. That’s every mine from every country in the whole world to get to that 30 billion. This one little mine is currently producing 3 million carats a year at a value of a billion dollars. So what, you say? Here’s what, only one company is on line right now but there are 260 companies that have staked claims on 100,000 square miles (larger than Texas). They’ve found 136 Kimberlite pipes with five already having enough diamonds to mine. Think about it; if there’s only one mine in production (Ekati Diamond Mine); one main Kimberlite pipe being used (named Panda, how cute); imagine what will happen when the other mines come on-line! Next year, Diavik Diamond Mines Inc. will be in production and at their peak they will be able to produce six million carats a year (twice that of Ekati)! With most of these mines’ life expectancy being 20 years, that’s over 6 billion dollars worth of diamonds to be produced from each single location. Before this decade is out, 12% of the world’s diamonds will be coming from Canada.
What it means to you
Nothing! The Canadians, as well as all the foreigners they are letting mine, don’t want to see the price of diamonds fall. It’s not in their best interest. They are going to do what’s been done for the last hundred years; allow certain amount to the market and hoard the rest for future consumption. What’s the point then? You can rest assured that your great, great, great, great grand children will have diamonds to wear when it comes time for them to go diamond shopping.
Diamonds will never become extinct.
by Fred Cuellar, author of the best-selling book “How to Buy a Diamond.”
More questions? Ask the Diamond Guy®