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It might surprise people to know that there are only around 50 active diamond mines in the world. These mines never seem to be found on the outskirts of major cities. Instead, they are usually located in very remote, and often very harsh environments. I’m often amazed at how these mines are ever found.
Diamonds are a crystallized form of carbon that grows from a primary carbon source subjected to very high temperatures and pressure. Almost all commercially minable diamonds are formed in an area of the earth’s mantle about 150 kilometers below the surface. This area is often known as the diamond stability zone, where temperatures are above 1000 degrees Celsius. There is also tremendous pressure at these depths, between 45- and 60-kilobars. In nature, this process can take anywhere from one billion to over three billion years.
In rare cases, diamonds have been found in rocks that are thought to have been sub ducted deep into the earth’s mantle by plate tectonic processes. This process creates very high pressures, but at a much lower temperature, usually around 200 degrees Celsius.
Diamonds also come from outer space, delivered to Earth by meteorites that enter the atmosphere and hit the Earth’s surface. Scientists believe that these diamonds were created under similar conditions, namely high temperature and heat. These diamonds exist in very small quantities, and the sites where the meteorites hit are not developed as mining sites.
Transportation of Diamonds
Once diamonds are formed in the diamond stability zone, they must then find their way to the surface of the Earth to be mined. This occurs through violent volcanic eruptions from deep within the Earth’s mantle. These eruptions send magma rapidly to the surface to relieve pressure from within the Earth. If these eruptions pass through the diamond stability zone, they can carry diamonds with them on their journey to the surface. The rock type produced by these volcanic activities is now known as a kimberlite, named after the South African town of Kimberley where it was first discovered. In rare cases, diamonds can be found in a lamproite, something of a cousin to the more common kimberlite.
These violent eruptions often create a tremendous explosion at the surface, which can deposit diamonds across a wide area. These eruption sites tend to settle over millions of years, and natural weathering and erosion covers the kimberlite in surface sand, earth, and foliage. Although there are some ten thousand known kimberlites in the world, only about a thousand of them passed through the diamond stability zone and carried the precious gems with them to the surface. Generally, kimberlites are only found in cratons, the oldest surviving areas of continental crust that have remained relatively unchanged for eons. This is why diamonds tend to be concentrated in certain areas, such as the northern areas of Russia and Canada, as well as Southern Africa.
Kimberlites are usually carrot-shaped, as the lighter rock very close to the surface tends to give way during the eruption process, and the kimberlite explodes outward in all directions. This is why most kimberlites lend themselves well to open-pit mining, often followed by underground mining. In some cases, kimberlites can fissure at the surface, leaving long dykes, sometimes at a distance from their original source. But no human as ever seen a kimberlite explosion, as the last event was believed to have occurred around 40 million years ago.
The challenge for mining and exploration companies is twofold. First, these kimberlite deposits must be discovered. Although geologists now know where kimberlites are most likely to occur, they are usually covered below the Earth’s surface. They are also found over a huge area, often in very remote locations. Second, once a kimberlite is found, it must be sampled to determine if it contains any diamonds and if there are enough to support the development of an economically-viable mine.
Exploration can be a long, and often tremendously expensive, process. According to Statista, global diamond expenditure peaked in 2010 at over $1 billion. Since then, however, most large mining companies have significantly reduced their exploration expenditure, after many years without a major new discovery. Now, diamond exploration is mostly centered on existing diamond mines, such as in the Orapa district of Botswana.
Oftentimes, smaller companies lead the exploration. These companies are hoping to get lucky and partner with a larger mining firm after making their own discovery. That is what happened at Diavik, for example. Sometimes luck plays a big role, as was the case with De Beers’ Victor mine in Northern Ontario, Canada, which was discovered after a geology student recognized a rock as being kimberlite while fishing in the Attawapiskat River.
Indicator Minerals and Geophysics
For the most part, though, prospecting for a diamond deposit starts by looking for minerals that aren’t diamonds. The diamond content of a kimberlite is very small relative to the mass of the rock. Some of the richest deposits in the world contain just one gram of diamonds per metric ton of rock, or one part per million. However, there are other minerals in much larger quantities that are transported along with the diamonds. Finding these minerals can provide clues to the location of the source. However, even this is very challenging, as natural weathering, erosion, and glacial movements over millions of years can spread these minerals over huge distances from their source.
As geologists learn more about the patterns of erosion, they are better able to use the dispersion of minerals to pinpoint the source. During the last ice age, glaciers scraped over the surface of the earth, as northern ice extended south as far as Chicago. This glaciation transported diamonds and other minerals across a wide area of Northern Canada and Russia, from where much of the world’s diamonds now come. Glaciers left behind fan-shaped patterns of mineral dispersion that geologists were able to use to pinpoint the source kimberlites. This breakthrough in the late 1980s set off a massive prospecting rush that has since resulted in the discovery of seven diamond mines in Canada, with more likely to be discovered in the years to come.
Prospectors can also use the ground geophysics of kimberlites to locate them. In Africa and Australia, kimberlites are often found in crater-like shallow surface depressions called maars. Some kimberlites have no special crater shape or depression to aid prospecting, but the kimberlite weathers to a yellowish soil. Where excavated, the "yellow ground" gives way at depth to fresher "blue ground", and deeper still, to the unaltered dark greenish-brown kimberlite.
Kimberlites that are close to the surface can sometimes be found using their magnetic and conductivity properties. The kimberlite has a subtle difference in its magnetic field compared to the surrounding rock. This anomaly can be seen from the air, using specialized equipment to measure the magnetic signature of the earth. Air geophysics allows prospectors to cover a large area in the shortest possible time.
Even after a kimberlite is discovered, there is a low probability that it will contain diamonds, and an even lower chance that it will contain enough diamonds that are large enough to make the mine economically viable. Usually, this assessment process involves taking progressively larger samples from the kimberlite to determine its viability. Drilling and sampling is expensive, costing millions of dollars with no guarantee of a return. Exploration usually involves taking a small sample of just a few kilograms of rock. This small sample often contains only very small diamonds, known as micro-diamonds smaller than one millimeter. However, statistical analysis can use the micro-diamond data to learn much about the kimberlite’s potential to host a large diamond population.
If micro-diamond analysis produces a favorable result, a larger sample is usually taken to determine the probable grade of the deposit, meaning the quantity of diamonds per unit of rock, like carats per ton. Again, this activity involves a lot of educated guesswork to extrapolate the grade of the entire project from just a small sample. If this result suggests commercial grades, then larger mini-bulk samples and bulk samples of a few hundred tons are often taken. These larger samples are meant to produce a portfolio of diamonds large enough to determine a value for the diamonds within. These sampling efforts also provide valuable information about the shape and delineation of the kimberlite underneath the ground. This is critical, as the total size of the underlying rock formation is a crucial consideration for the owner.
Kimberlites often occur in clusters within an area. This means that sampling is usually done on many kimberlites at once. This adds significantly to the costs, with no guarantee of an economically viable find. As an example, the Chidliak diamond property in Nunavut, Canada has so far yielded 74 unique kimberlite discoveries on a property of 5,130 square kilometers. Although diamonds have been discovered in many of the kimberlites, no individual kimberlite pipe has produced an economically viable diamond mine.
The Magic Formula
The information gathered from sampling allows a miner to determine the viability of the project using a simple formula. The grade of the deposit is multiplied by the average value of the diamonds (in US dollars per carat) to determine the inherent value of each ton of rock. This value is multiplied by the total proven size of the deposit to determine the total value of the diamonds within. From this, the cost of building a mine as well as the ongoing operating and financing costs are deducted to determine the estimated profit to shareholders.
Profit = (Grade * Average Value per Carat * Total Volume of Ore) – (Capital Costs + Financing Costs + Operating Costs)
Keep in mind that this calculation is usually determined from sampling a very small section of the total mine. There are no guarantees that the results from mining will succeed in meeting initial expectations. Also, because it takes many years to build and operate a mine, the economics of mining are subject to many factors, including currency fluctuations and global diamond demand, many of which are impossible to predict over the long term.
As an example, the now closed Jericho Diamond Mine in Canada went bankrupt when grade and diamond values did not meet initial projections, and currency changes moved against the operator. Conversely, the Karowe Mine in Botswana has recovered a huge number of very large diamonds that were initially only theoretical from small early samples.
Diamond resources are few, and prospecting for diamonds is a very expensive and very risky proposition. Large mining companies are spending less on exploration, as the returns over the past decade have been minimal. More and more, smaller companies are driving exploration and many struggle to raise the capital to continue with this risky gamble. However, for those with the good fortune and skill to find a viable mine, the returns might be vast.
The views expressed here are solely those of the author in his private capacity. No one should act upon any opinion or information in this website without consulting a professional qualified adviser.
Diamond industrialist Ehud Arye Laniado is a man passionate about diamonds. From his early 20s in Africa and later in Belgium honing his expertise in forecasting the value of polished diamonds by examining rough diamonds by hand, till today four decades later, as chairman of his international diamond businesses spanning mining, exploration, rough and polished diamond valuation, trading, manufacturing, retail and consultancy services, Laniado has mastered both the miniscule details of evaluating and pricing individual rough diamonds and the entire structure of the diamond industry. Today, his global operations are at the forefront of the industry, recognised in diamond capitals from Mumbai to Tel Aviv and Hong Kong to New York.