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Tuesday
Jul092013

Argyle pink diamonds get heart of stones beating

Rare pink, red and blue Argyle diamonds. 

IF diamonds are a girl's best friend, to use the well-known refrain, then a pink diamond is a soulmate - an exceedingly rare find. It was certainly the rarest of finds for global mining giant Rio Tinto in 1979 in Smoke Creek in Western Australia's Kimberley, a region of rugged yet breathtaking terrain.

Exploration crews were working their way along that creek on October 2, 1979, when one of the geologists saw a small diamond embedded in an anthill. Thus began the start of the Argyle diamond mine and a multi-billion-dollar industry.

Diamond enthusiasts marvel at the sparkle and attraction of a white gem, but the precious pink stones are truly unique and they comprise less than one-tenth of 1 per cent of Argyle's annual diamond production.

The mine is globally recognised as the dominant supplier of these exclusive gems and the massive operation - it was the world's largest diamond mine when it was discovered - supplies more than 90 per cent of the world's supply.

It was the rarity of the pink diamonds that led Rio to sell the top selection, of about 50 carats, annually through a tender process.

"Rio Tinto quickly realised that the rare quality of its pink diamonds should be marketed to reflect their uniqueness, exclusivity and glamour," Jean-Marc Lieberherr, chief commercial officer for Rio Tinto Diamonds, says.

"The development of the annual Argyle pink diamond tender was a significant contributor to establishing the profile of Argyle pink diamonds."

The ritual was established in 1985, with a tender in the world's diamond centre, Antwerp, in Belgium, and in later years repeated in cities such as New York, London, Geneva and Hong Kong. By 1992, Tokyo was included as a preview location; in 2009 Mumbai joined the list and a year later, in 2010, mainland China became a part of the annual roadshow. "Today the successful bidders are spread throughout established and emerging luxury markets," says Lieberherr.

Before they are sparkling in the windows of jewellery stores, enticing prospective buyers, the diamonds must go on an incredible journey. It can take up to 18 months from the time a diamond is recovered at the mine until it hits the market.

Eyeing a rare pink diamond set in an exquisite piece of jewellery does not evoke images of dusty red dirt under a sparkling blue sky, surrounded by rugged vegetation and eagles flying above, but these are the surroundings of where the stone starts its life. A general stereotype of mining depicts miners crawling down mine shafts, suffering from claustrophobia, but the reality is astonishingly different.

Argyle mine managing director Kim Truter uses a sporting field analogy to explain the size of the underground mine. He says the size of the pit, which is 650m below the earth's surface and accessed by driving through a portal, equates to about 20 rugby fields.

Rio took the decision in 2011 to spend $2.2 billion to move the operation - which was an above-ground open pit - underground to extend the mine life out to 2020.

The underground operation is expected to be one of the most automated mines in the world and involves driverless 14-tonne loaders to transport the ore.

Mining the diamonds involves an extremely large "dirt-moving exercise", with about 12 million tonnes of dirt shifted each year.

Once the ore is dug out, it goes through an extensive crushing process to reduce it in volume and then a diamond-rich concentrate is produced from the ore. This is then fed through a series of custom-designed X-ray sorters because diamonds fluoresce, or emit light, when exposed to X-rays. An air blaster then blows the diamonds into a collection box after which they are washed, weighed and transferred to Rio Tinto Diamonds' central sales and marketing organisation in Antwerp to be prepared for sale.

In Antwerp's diamond district, the rough diamonds are sorted by colour, with the "non-pinks" further sorted by size, shape and colour and sold as parcels of rough diamonds with the majority of customers based in India.

The pink rough diamonds are returned to Perth for cutting and polishing and are sold to an international customer base of traders, jewellery manufacturers, jewellery designers and luxury retailers.

The top polished pink diamonds are then sold through the annual tender.

It's fitting that the most exclusive diamonds in the world are also sold through the "most exclusive" diamond sale in the world.

Only the finest and best pink diamonds are offered through private, invitation-only viewings, with prospective bidders submitting "silent" offers for the gems.

The diamonds selected for tender are collected over a one-year period and cut and polished in Rio's factory in Perth and graded by two independent grading laboratories.

The tendered pink diamonds have an average size of about one carat, with about 40 to 50 carats sold through auction each year.

Prices achieved have ranged from $US100,000 a carat to more than $US1 million a carat and pink diamonds sold at tender are often worth up to 50 times the price of a comparable white diamond.

The tender creates great interest in the international jewellery trade and about 200 potential buyers are invited to view the diamonds. Eighty to 100 make appointments to examine them and about 25 of them will make successful bids.

"People who buy one of Argyle's top-quality pink diamonds join one of the world's most exclusive clubs, for only about 50 carats, or 12 grams, are offered for sale each year, in an almost mystic ceremony," says Josephine Johnson, manager of Argyle Pink Diamonds.

"The rarity of the Argyle pink diamonds is such that for every million carats of rough diamonds produced by Argyle, less than one carat is suitable for offering at the annual tender."

Johnson isn't talking up her own business when she says simply that the diamonds truly have international appeal. "New York, Sydney, London and Hong Kong are traditional heartlands but we experienced overwhelming interest when we visited the developing cities of Beijing, Shanghai and Mumbai in recent times," she says.

The origins of the pink colour are a mystery. It is widely thought that it develops from a change in the molecular structure of the diamond, following formation in the earth's mantle or during its ascent to the earth's surface.

Historically, the pink gems have been the jewel in the Argyle crown, until an astonishing find last year knocked them off their perch and rewrote the history books in the process. The mine produced three rare red diamonds in a single year - no mean feat considering there have been only six from the mine in its 30-year history. The diamonds are classified as "fancy red" by the Gemological Institute of America, because of their extraordinarily rare saturation of colour.

The three red diamonds are features of this year's tender, which comprises 64 diamonds - 58 pink diamonds, three fancy red diamonds and three blue diamonds. The "hero" of this year's collection is a 1.56-carat round red diamond named Argyle Phoenix, which is the largest of the nine red diamonds recovered at Argyle in its history and is the largest red diamond found in Australia.

Johnson says diamonds are not fast-moving consumer goods and can take months, or years, to be set into a piece of jewellery as the piece must be created around the diamond and each design is unique.

"Some designs have taken years to complete as finding the colour, shape and size matches took great patience and vision. Some of the tender diamonds are never set into a piece of jewellery and remain vaulted as special collectables."

Argyle Pink Diamonds also collaborates with its partners on iconic events or important items of jewellery and in 2010 it made its first foray into branded jewellery to commemorate Oprah Winfrey's visit to Australia. The 100 limited edition "O" Pendants sold out in 24 hours.

Before the shiny pink stones were so widely recognised, Laurence Graff, one of the world's most famous jewellers, made a bid in the mid-1980s to acquire an entire pink tender offering.

"It was unheard of and they were of a pink colour that hadn't been seen before," he remembers. Graff decided to use all the pinks to make one single creation and he produced a magnificent "tremblant flower".

"I remember it was finished at four o'clock one afternoon and just then I had a call from the Sultan of Brunei, who granted me an audience at the Dorchester [in London]; he had just bought the hotel.

"During our meeting he asked if I had anything I would like to show him. I had slipped this amazing piece in my pocket and while we were talking I pulled out the flower and said, 'Your Majesty, what do you think of this?'. He opened his hands to have a look at it and I could see his eyes gleam with excitement at this absolutely unique and beautiful jewel and I sold it to him in two minutes. I was out of all the Argyle pink diamonds in two minutes."

Johnson says demand for Argyle Pink diamonds today certainly outstrips the supply and while the company does not have a "massive" marketing budget, it believes it is important to support its retail partners and provide education on the rarity and value of Argyle Pink diamonds.

"Pink diamonds are very different to white diamonds. Rather than size and clarity, the value of pink diamonds is driven by colour saturation and this turns the well-known 'rules' of diamond buying on their head. We also have a great story of provenance to share as the diamonds come from a beautiful place and remain under our custody until final sale."

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