Regardless of all the history that the Argyle mine sparked—some of it no doubt unexpected when a handful of diamonds were first discovered in Western Australia in 1979—its closure may signal a new era in diamond mining.
There was a lot of conjecture in the early 2000s about how diamond supply would remain steady or dwindle, and demand would rise, leading to an unstoppable upward trajectory of diamond prices.
That didn’t pan out, for two reasons. First, demand was erratic, and subject to wild fluctuations. It didn’t help that, for about a decade, the industry didn’t do much to sustain it, but simply lived off the coattails of De Beers’ old ad campaigns.
But the other is, during the 2010s, diamond production didn’t actually dwindle. It rose—it was perhaps even helped by companies with stars in their eyes when they saw that supply-demand ratio. In 2017, diamond production jumped 26 million carats, the biggest single jump since 1986, according to Bain & Co. The beginning of 2019 saw near-record levels of diamond production, which may be why it was also a near-record year for market turmoil.
Now, not only is Argyle going off stream, but the two non–De Beers mines in Canada—Ekati and Diavik—are in serious jeopardy, given owner Dominion’s bankruptcy. And even if those mines make it through the current crisis, they are both expected to close in a few years. Petra Diamonds, which owns four mines, just received new financing, but it’s also clearly having issues. It put its mines up for sale a few months ago, and had no takers.
And, of course, there hasn’t been a major new diamond find in decades.
So, even though Argyle wasn’t producing as much as it was at its height—when it was the largest diamond producer in the world, by volume—its end may signal the long-awaited decline of diamond production. Mine owner Rio Tinto, once a formidable player in the industry, with holdings in three mines, is now only left with its 60% ownership in Diavik. It has tried to exit the industry before, ultimately opting not to, but now that seems inevitable.
None of this means that the world is in danger of “running out” of new mined diamonds in the next few years, as some in the lab-grown business would have it. There are plenty of well-stocked diamond mines out there, and they are likely to produce millions of carats through 2040 and beyond. There’s also the possibility of new diamond finds in Angola and Zimbabwe, though it takes awhile to get a real diamond producer up to speed.
But when you talk about low-end product used for fashion jewelry—the kind that Argyle specialized in—that’s an opportunity for the lab-grown sector. That market is all about the look and the price point. And lab-growns, being cheaper to produce, give you a better look for less money.