Richard (Rick) Mills
Ahead of the Herd
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As a general rule, the most successful man in life is the man who has the best information
De Beers shaped today’s diamond market. They started in the U.S. back in the late 1930s.
De Beers wanted to expand its market (at the time De Beers controlled 90% of the global diamond market). Diamonds, the larger diamonds, had always symbolized wealth and status but how could De Beers market the smaller diamonds to the masses?
In 1938, De Beers hired Philadelphia ad agency N.W. Ayer. The agency set an ambitious goal, they set out to: “create a situation where almost every person pledging marriage feels compelled to acquire a diamond engagement ring.”
A U.S. promotional campaign was planned and it focused on telling every guy (and maybe even more important every girl) that he absolutely needed to give his special her a diamond ring (and diamond jewelry) to express his true love and lasting commitment, because, just like his love and commitment, ‘a diamond is forever.’
“The agency wanted to make it look like diamonds were everywhere, and they started by using celebrities in the media. "The big ones sell the little ones," said Dorthy Digham, a publicist for De Beers at N.W. Ayer.”
How Diamonds Became Forever,The New York Times
The “A Diamond is Forever” campaign was so successful the U.S. became, and still is at $9 billion a year, the world’s largest diamond jewelry market.
The same campaign was also a huge success in Japan with diamonds replacing pearls in the 1950s. Today China and India’s 2.6 billion people are targeted – because only diamonds can show her how you truly feel.
“If you look back 20 years, there was no diamond acquisition culture in China. But today in Beijing, Shanghai, and Guangzhou, there is an obvious launch pad. 40% of brides in those cities are getting diamond engagement rings. It was zero 15 years ago." Gareth Penny, CEO DeBeers
The decade to come will be the years of the diamond. According to a Bain & Company report global rough-diamond demand in value terms should increase at a compound annual rate of 5.1%, to $26 billion by 2023.
"The appetite for high-quality diamonds in China and India is growing," notes Gerhard Prinsloo, the author of the report." In terms of market share, India and China will represent 30% by 2020, equal to that of the United States. Supply should only increase by 2.8% per year, leading to a structural shortage."
Diamond demand, over the next decade or so, will be particularly driven by India and China due to a doubling of the middle class in these countries (of the two China has the fastest growing demand, jumping to a share of about 15 percent of the world's diamond market from less than three percent in 2003).
There’s no shortage of future markets – it won’t be long before one out of every four people on the planet is going to be an African. They don’t know it yet but there’s diamond jewelry in most of their futures.
Dundee Capital Markets
Current diamond demand is 175 million carats, by 2020 demand is expected to reach 247 million carats.
Two new diamond mines are expected to start production in Canada over the next few years - Gahcho Kué and Renard.
Dominion Diamond’s Ekati mine will increase production by starting to mine the Misery pipe.
Globally there are three large mines scheduled to start operations within the next four years: Lace, Botuobinskaya and Bunder. The last major mine discovery came a decade ago in India, at Rio Tinto's yet to be completed Bunder project.
LUKoil’s Grib mine started production this earlier this year and Alrosa’s Karpinskogo mine started production in October.
Some of the largest and most important mines in the world are running out of diamonds to mine - Orapa and Jwaneng (Botswana) have less than 15 years of production left at current parameters. Orapa and Jwaneng are the largest diamond mines in terms of total dollar value produced.
The alluvial Marange diamond fields (Zimbabwe - 13% of global rough supply in 2013) are expected to produce eight million carats of diamonds in 2014. Mining is transitioning from easily accessible loose surface gravel to hard conglomerate rock. Most miners are not willing to make the necessary investment at current rough diamond prices. Conglomerate rock grades are 0.4-0.5 carats per tonne while surface grades were 3.75 cpt
Marange is the largest producing project in the world in terms of total carats produced. It is third in terms of total dollar value after Botwana’s Orapa and Jwaneng mines.
Pikoo Kimberlite Field
Let’s take a look at what might well be the world’s newest emerging diamond district.
Stornoway Diamond Corp.’s (TSX – SWY) regional exploration programs were intended to test the diamond potential of the Sask craton in north-central Saskatchewan.
Exploration work included KIM sampling programs, an airborne geophysical survey (to detect magnetic differences on the ground), prospecting and geophysical anomaly checking – ground truthing of targets.
Kimberlite indicator mineral (KIM) sampling consists of digging a hole and taking up to 20 kg of glacial till – dirt - and sending it to a laboratory for the recovery and analysis of indicator minerals - if any.
Assortment of kimberlitic indicator minerals including purple pyrope, red, orange and pink pyrope garnets, chromian diopside, picroilmenite and chromite.
Indicator minerals such as pyrope garnets, chromites, and ilmenites are used as kimberlite tracers because these KIMs are found in the same place diamonds form, deep beneath the earth’s surface in the diamond stability field.