Regal Assets Analytics

Monday, March 4, 2024

    Argyle Octavia Diamond Mine

    Diamond production is expected to drop by 99 percent in Australia when Argyle Octavia shuts its doors. Yearly output is estimated to drop from 14.2 million carats of rough diamonds to 137,000 carats.

    While white diamonds are produced en masse at a number of mines around the world, the Argyle closure will disproportionately affect the pink diamond market, as the Australian mine produces 90 percent of global supply.

    Diamond analyst Paul Zimnisky pointed out, “Argyle supplies the large majority of global fancy pink and red diamonds, so the closing of the mine will noticeably impact the supply of those gems. Argyle ‘pinks’ have become a unique good, which tend to be differentiated from other fancy pink diamonds.”

    And the value may increase once the mine is officially shuttered.

    “If demand remains steady for those goods, then the law of economics bodes well for prices given that new supply will be halted,” he added.

    Production has already begun to decline at the massive mine. During Q2 2019, output was down 5 percent compared to the same quarter in 2018 and 9 percent lower for the half year period.

    Rio expects to recover between 15 to 17 million carats from Argyle this year. Part of that multimillion carat haul will include the 28.84 carat gem quality white diamond the company unearthed earlier this year.

    The Argyle Octavia is the largest gem quality white diamond ever discovered at the Australian project.

    “We are delighted with this discovery which is a testament to the extraordinary Argyle orebody that continues to deliver these miracles of nature, even as it nears the end of mine life,” Arnaud Soirat, chief executive of Rio Tinto’s Copper and Diamonds portfolio, said in a March press release.

    Indeed, Octavia is spectacular in a variety of regards. It is one of the 0.00007 percent of the white diamonds weighing more than 20 carats ever recovered from Argyle.

    With a unique octahedral shape, the rough, gem-quality diamond is a true testament to the beauty of nature, as is the Argyle Pink Jubilee, a 13 carat rough pink diamond discovered in 2012 that was subsequently cut down to 8.01 carats. The Jubilee is the largest pink diamond ever recovered in Australia and is on display at the Melbourne museum.

    While the amount of Argyle pinks and reds available for purchase may drop, there may be a glimmer of hope for investors and collectors if the company has stockpiled some of the rare stones.

    “Rio has not disclosed if there is excess Argyle rough currently being held as inventory; however, given recent market conditions it is likely that there is at least some inventory,” said Zimnisky.

    Still, he did note that stockpiled stones will not compensate for the mine’s closure.

    “That said, given the high volume of Argyle production, my guess is that any inventory held is nowhere significant enough to offset production lost when the mine is finally closed.” Rare purple-pink diamond


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