The closure of the Argyle mine in 2020 caused quite a stir in the diamond world. The Argyle mine in Western Australia - owned by mining group Rio Tinto - was the world's largest source of pink diamonds. As a result of this closure, diamond production in Australia plummeted by 90%. How should the Australian diamond sector proceed? Several diamond producers are currently focusing on discovering - or rather rediscovering - rare diamond sources. The interest is mainly focused on two closed diamond mines in Australia: the Ellendale mine and the Merlin mine. Read why below.
What after the Argyle mine closure? New prospects for Australia's diamond sector06 Sep 21
The Ellendale mine: source of yellow diamonds
The Ellendale mine in West Kimberley produced 1.3 million carats of diamonds from 2002 to 2015. During that period, the mine was responsible for as much as 50% of the world's production of yellow diamonds. The Ellendale mine is further known for its exclusive deal - although short-lived - with renowned jewellery chain Tiffany & Co. in 2009. In 2015, it was decided to stop production, as yellow diamonds are in a lower price category. However, in the last decade the price of yellow diamonds has increased by 30%. A possible reopening of the Ellendale mine and the associated production of yellow diamonds looks a lot more lucrative as a result.
Fancy yellow diamonds versus colourless diamonds with a yellowish colour
Colourless diamonds are more valuable if they have a high degree of colourlessness. This colour grade is represented in codes from D to Z. D stands for completely colourless - and is therefore the most valuable - while Z has a yellow tint. Coloured diamonds, the so-called ‘fancy diamonds’, however, are not graded using these codes. Indeed, the value increases as the colour intensity increases. Thus, a distinction is made between Fancy Light, Fancy, Fancy Dark, Fancy Intense, Fancy Vivid and Fancy Deep. The yellow diamonds from the Ellendale mine belong to the group of coloured diamonds.
Following closure, a 8.43-carat yellow diamond was mined at the Ellendale mine in 2017 by the Gibb River Diamonds company during an exploration. The yellow stone was one of the largest yellow diamonds ever discovered in Australia.
During further explorations in 2020, three natural fancy yellow diamonds were found by India Bore Diamond Holdings (IBDH) with unique features, namely a purple fluorescence when exposed to uv light. Fluorescence in diamonds is a rare phenomenon that occurs in only 25% to 35% of all diamonds worldwide. In most cases, this fluorescence has a blue colour, which therefore makes the purple fluorescence of these Ellendale diamonds even more special.
New mining contract 'L-Channel Deposit'
Recently, in March 2021, a license was granted to IDBH to mine the so-called 'L-Channel Deposit'. This is an alluvial channel that runs from north to south through the mine and contains a type of thick rock containing diamonds. Tests conducted by IDBH in that area have shown that a large number of diamonds can be found, including quite a few fancy yellow diamonds. At least 1.3 million carats of diamonds are expected to be mined in the area.
Evaluated by the Antwerp masters
In 2020, diamonds from the test project conducted by IDBH in the L-Channel Deposit of the Ellendale mine were sent to Antwerp for evaluation. The diamonds were received in Antwerp according to the regulations of the Kimberley Process. Renowned Antwerp diamond dealers conducted an independent investigation into the colour of the diamonds, an IBDH article also confirms. As part of this research, the rough diamonds were also cut. The colour gradings go from Intense and Fancy to Light Fancy.
The Merlin mine: source of undiscovered diamonds
A second mine that may again become important for the production of coloured diamonds in Australia is the Merlin mine. The most noteworthy finds coming from the Merlin mine include a white diamond of 104.73 carats (rough), a brown diamond of 35 carats (rough) and a rare small blue diamond.
The mine was operated from 1998 to 2003 and reopened for a short time in 2016. The Merlin mine produced 500,000 carats of diamonds, 65% of which were gem quality - in stark contrast to the large Argyle mine, of which only 5% of the diamonds mined were gem quality.
The closure of the Merlin mine came primarily because of financial problems with the last owner of the mine, namely Merlin Diamonds (formerly North Australian Diamonds). A month after the closure of the Argyle mine in 2020, Australian diamond producer Lucapa Diamonds showed interest in the Merlin mine. After all, the diamond mine would still contain a lot of unexplored areas, with exclusive diamonds to mine.
BNT Diamonds follows new developments in the field of investment diamonds very closely. If you would like more information on fancy yellow diamonds, other coloured diamonds or colourless diamonds as an investment, you can always make an appointment in one of our showrooms or contact our diamond experts directly at +32 3 201 24 90.