Despite the global economic downturn, Rio Tinto’s 25th Argyle Pink Diamonds Tender realized record prices in 2009. According to the company, the Tender attained “exceptional result[s] that [belied] the global financial crisis of the past 12 months.” As pink diamonds from Argyle become increasingly more rare – and desirable – IDEX Magazine editor-in-chief Danielle Max examines the Tender process and asks where prices are headed.

 

With production at Rio Tinto’s Argyle mine in Australia currently planned to end in 2018, it is little wonder that the prices commanded by the pink diamonds found at the mine continue to rise, and rise, and rise. Such is the rarity of these diamonds that for every million carats of diamonds produced at the mine in Western Australia, only a minute 1 carat is deemed suitable for sale under the banner of the pink diamond Tender. With the Argyle mine producing more than 90 percent of the world’s pink diamonds, there is limited options for buyers looking elsewhere for quality pink stones and these options are going to be even more challenged once production ceases in less than a decade.  

 

Pink Diamonds Images Courtesy Rio Tinto Diamonds

Each year, about 100 select clients, representing individual diamantaires, jewelry manufacturers and luxury retailers receive invitations to view the Tender diamonds in various global viewing locations. Included on the list of invitees are top-end jewelers (the pinks are sold in retailers such as Asprey in London and Harry Winston in New York), dedicated Argyle clients or Rio Tinto Diamond’s Select Diamantaires.

 

Reflecting changing markets, the 2009 Tender was shown in Mumbai for the first time, with New York temporarily off the list, though a viewing will take place there this year. According to Josephine Archer, business manager, Argyle Pink Diamonds, Rio Tinto changes viewing locations according to circumstances. “Last year was a significant milestone for Rio Tinto in India – we celebrated the 20 year anniversary of our Mumbai office, which occurred alongside some significant milestones in the development of Rio Tinto’s new Bunder diamond mine in Madhya Pradesh. It was considered timely to celebrate these milestones with the inaugural showcasing of the Argyle Pink Diamonds tender in India,” she says.

 

Attesting to these changes, the Tender will not be shown in Mumbai in 2010, Archer says that it is not due to lack of interest. “We were not disappointed as the reaction to pink diamonds in India was overwhelming. Whilst we will not be staging the Tender in India again in 2010, we are investing in some opportunities that arose as a result of our activities last year.”

 

In another first, Rio Tinto is taking the to China for the first time. A decision that, says Archer, “reflects the importance of this emerging marketing to Rio Tinto’s diamond business.” Emphasizing Rio Tinto’s increased activities in China, Archer says that Rio Tinto is a platinum sponsor of the Australian pavilion at the World Expo in Shanghai, which will provide a useful platform for showcasing the Argyle Pink Diamonds Tender.

 

Like the auction scene in general, Rio Tinto has seen a shift in the demographics of those who are buying the diamonds, with increased interest from the emerging markets of India and China. “Across all geographical markets we are seeing an increase in demand for pinks from investors,” says Archer. “As global financial markets show volatility and instability, affluent investors and collectors are taking a closer look at rare, hard assets to diversify their portfolio and protect their wealth. Argyle pink diamonds fulfill this criteria and, as supply dwindles, international collectors and investors continue to acquire these rare pieces for their personal holdings.”

 

And they are doing so at increasingly higher prices. Since the first Argyle Pink Diamonds Tender was held in Geneva in 1985, prices have increased exponentially. “This price growth is a reflection of the fundamental economics of pink diamonds – increasing demand for a truly scarce product. Never before, and never since then, has there been a diamond mine that consistently produced rare pink diamonds like the Argyle Diamond Mine,” says Archer.

 

This rarity, she says, plays the dominant role in driving the value of Argyle pink diamonds to new heights. “The chances of any future mine discovery replicating the unique properties of the Argyle mine, is extremely low. Currently there are no other pink diamond mines or deposits and even if another deposit of pink diamond-bearing ore is discovered, it takes on average 10 years for a mine to proceed from discovery to production.”

 

On the demand side, Archer says, there have been a number of developments since the 1980s in areas such as diamond cutting, marketing and grading that have helped put pink diamonds squarely in the public eye. “Historically, coloured diamonds were manufactured in the same shapes and cutting styles as their white diamond counterparts. That began to change in the mid-1980s as the supply of a small, but consistent number of pink diamonds began to emerge from the Argyle mine. Diamond cutters began to experiment with ways to obtain a better yield (weight) from the rough pink diamond and improve and intensify its colour. These innovations laid the foundations for what is now accepted practice for cutting all coloured diamonds.”

 

In addition, she says, greater coverage by the mainstream media of pink diamond purchases and adornment by celebrities has been particularly important to the growth in consumer awareness of pink diamonds. Despite the popularity of pink diamonds with celebrities (who can forget the $2.5 million price tag for the 6 carat emerald cut pink diamond ring Ben Affleck gave to then-fiancé Jennifer Lopez?) individual buyers, even those with famous names, cannot attend the Tender and must be represented by an invitee.

While Rio Tinto keeps information about the prices a closely guarded secret, perhaps to add to the allure and exclusivity of the diamonds, Archer said in a press release following the close of the 2009 sale that the results, "demonstrated a significant global reach with very strong price appreciation."

 

As for what happens to the diamonds after they are purchased through the Tender process, Archer says it is difficult to know, although clients often inform Rio Tinto when an important stone passes through to its ultimate owner – who run the gamut of investors, collectors, celebrities and other high-net-worth individuals. “I know that some of our customers like to hold these stones for their own investment value and others like to trade. Some stones are set aside for important jewellery pieces that can take months to come to fruition. I also know that one of the 2008 hero stones, “Aphrodite” was in a ring and gifted for Christmas within weeks of the Tender closing.”

 

It is a rare person who can boast that they received an Argyle pink diamond for Christmas. The number of stones offered at each Tender has varied over the years from 40 to 60 stones, depending on each year’s particular production. At the time of publication, the company was finalizing its selection for the 2010 Tender, which Archer says will number from 40 to 50 lots.

 

In 2009, 43 stones were sold, including four heart-shaped gems. The Tender’s showpiece was an intense pink, heart-shaped stone named "Argyle Amour™." With a weight of 2.61 carats, it was the most valuable heart-shaped pink diamond ever produced from the mine.

 

Although it is too early in the selection process to say what the “stars” of the 2010 auction will be, Archer alluded to an extraordinary diamond. “An exquisite, vivid 2.02 carat round came off the wheel last week amidst much excitement, and is currently being graded by our team. It is captivating and certain to be a hero stone this year.”

 

 

 With the end of mine life in sight for Argyle plans are necessarily being made for the future. Currently, says Archer, all of the stones suitable for sale are offered up for auction, with none being held back in reserve for when Argyle yields up its last pink treasure. However, she says, this is a position that the company may review as the end of mine life approaches. Until then, it is business as usual.

 

While there are no estimates for the price of diamonds once mining ends, Archer does point out that there are only around 500 more Tender-quality diamonds available between now and 2018, and, like in any auction, once they are gone, they are gone.