Putting Australia back on the Diamond Map

Last November marked the end of an era for Australia's diamond mining industry. The Argyle mine ceased operations after 37 years. It had dominated the market for pink diamonds, producing 90 per cent of global output, but operators Rio Tinto had concluded it was no longer economically viable.
Argyle produced a total of 865m carats in its lifetime and for some years it was the world's largest diamond mine by volume. It was Australia's only working diamond mine and since its closure the country's diamond output has dropped to zero.
But the industry is about to be revived and Australia is about to win back its place on the map of diamond-producing countries. Its two remaining diamond mines - Ellendale and Merlin - are both currently out of action, but both are on the brink of resuming operations.
The newest development came last week when Lucapa, the Perth-based miner, completed its acquisition of Merlin for $6m through its wholly-owned subsidiary Australian Natural Diamonds.
Within the next three years, it says the deposit, in a remote part of Northern Territory, approximately 720km south-east of Darwin, should start production again. It estimates annual production at 153,000 carats a year, generating a total projected revenue of $1.14bn over 14 years.  The cost of developing the mine is estimated at $68m.
"For Australia to go from in the top five or six diamond producers in the world when Argyle was in production, to producing no diamonds is not a good statistic," said Lucapa managing director Stephen Wetherall when Argyle closed.
"So hopefully within the next couple of years we are going to turn that around and put Australian diamonds back on the map."
Merlin still holds the record for Australia's biggest ever rough diamond, a 104.73-carat type-IIA stone that was recovered in 2003 and valued at the time at $500,000. But it's had a bumpy ride. The mine was opened in 1999 by Ashton Mining, a wholly-owned subsidiary of Rio Tinto, but closed in 2003 after producing  500,000 carats. The site was then sold to Striker Resources (which became North Australian Diamonds and subsequently Merlin Diamonds).
Production re-commenced in September 2013 with the processing of the historic stockpiles. But the company, chaired by 'Diamond Joe' Gutnick - former president of the Melbourne Football Club and one of Australia's best-known businessmen - was wound up last year after the company reported a series of losses and was suspended from the Australian Securities Exchange.
Lucapa, which has also developed mines in Angola and Lesotho, is hoping to put all that behind it as it begins a new chapter at Merlin.
"The results of the scoping study confirm the great potential identified by Lucapa using an innovative hybrid open pit and vertical pit mining methodology to establish a mining operation at Merlin," said Mr Wetherall.
That scoping study concludes that there is "strong justification that Merlin will be commercially viable and accordingly the board of Lucapa has already progressed to a feasibility study which is planned to be completed in the middle of 2022.
"Kimberlite exploration aimed at identifying new discoveries at Merlin will also commence in Q2 2022 following the end of the wet season."
Australia's other diamond mine, is also mothballed at the moment, but is also about to be revived. Ellendale, in Western Australia's Kimberley region, ceased production in 2015 when previous owner Kimberley Diamond Company went into liquidation, relinquishing its lease and environmental liabilities — said to be up to $28m — back to the state government.
It was the world's largest producer of fancy yellow diamonds and had an exclusive supply agreement with Tiffany & Co.  India Bore Diamond Holdings and Burgundy Diamond Mines, both based in Australia, now have tenements at Ellendale and mining there could resume there as early next year.

And so 2021 draws to a close. It's been, for the most part, a year of recovery for the diamond industry. Let's hope that continues and that we can overcome whatever Covid throws at us in the coming months. Wishing all who celebrate a merry Christmas, and a happy and prosperous New Year to everyone. Have a fabulous 2022.