Has the last “world class” diamond deposit already been found? If so, what does it mean for the future of the industry?
The last major diamond deposit to be discovered was the Diavik Mine in Canada, which was found in the mid 1990s. Since then, most new producing mines are deposits that were previously known but lay undeveloped for various reasons. These include the currently headline-making Karowe Mine in Botswana which was discovered way back in 1971. In the last three decades, the major diamond companies such as De Beers and Alrosa have spent many millions of dollars looking for the next big one, but with no obvious (publicised) success. Previous major producers and explorers such as BHP-Billiton and Rio Tinto have lost interest in the sparkly gems and either pulled out completely or have attempted to do so. Even De Beers (now under Anglo American control) has scaled back on exploration, leaving only Alrosa as a serious diamond explorer. Exploration has been left mostly to the juniors, whom the majors are hoping will be looking for investment partners if they do find something. Investing in greenfield diamond exploration projects is at best a high risk investment decision and unsurprisingly, the juniors are finding it difficult to attract investors.
So the question is, are there any more big deposits out there? To answer that, we need to consider a number of things. Are current exploration models valid for all known diamond deposits? Are accessibility issues, particularly those influenced by political and security considerations, preventing the next discovery? Have good deposits been missed for some technical reason? I will attempt to answer these questions in this presentation.
Existing mines are deepening and heading for more costly underground mining and eventual but certain closure. The supply side of the economic outlook model is looking challenged and unlike some metalliferous commodities, there is no longer a stockpile for the industry to rely on. Surely economic dynamics are very much in favour of diamond exploration, provided we know where to look, what we are looking for, and how not spend a shedload looking!
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