Proactive Investors - Run By Investors For Investors

Why do you always find diamonds in the same places?

The ten richest diamond mines in the world are all located within four countries, but why is the diamond mining industry constrained to such a limited number of locales?
South Africa, Botswana, Russia, and Canada contain the majority of the world's biggest diamond mines

In mid-March, Gem Diamonds Limited (LON:GEMD) sold a 13.33-carat pink diamond recovered from its Letšeng mine in Lesotho for US$8.75mln.

The diamond, which was sold in the world’s largest diamond district at Antwerp in Belgium, fetched a per carat price of US$657,000, a record for any diamond from Letšeng.

However, the diamond is nowhere near the biggest one that Gem has recovered from the mine, with the first six months of 2018 seeing ten 100+ carat diamonds as well as a whopping 910 carat stone known as the ‘Lesotho Legend’.

To put that in perspective, a carat is equivalent to around 0.2 grams, meaning the Lesotho Legend weighed around 182 grams, more than a billiard ball.

But why exactly are most diamond miners based in such small clusters of the world, and how can mines like Letšeng keep pulling such large stones out of the ground? The answer lies in the form of a rock called kimberlite.

Richest source of diamonds

Named after the South African town of Kimberley where a diamond boom began in the late-1860s, kimberlite is formed from columns of magma that have pushed their way up through gaps in the Earth’s crust and solidified forming long shafts of rock.

These kimberlite ‘pipes’ are the world’s richest source of diamonds and occur in only a few select areas of the world – most notably South Africa, Botswana, Russia, and Canada. In fact, out of the top ten diamond mines in the world, only two are located outside these countries (and those are in neighbouring states). 

The reason why these pipes usually occur so close together (like in one country or area of the Earth) is down to the geology that causes the kimberlite magma to reach the surface. A specific combination of minerals is required to create carbon dioxide bubbles that help push the magma to the surface. If those are missing, it doesn’t have enough energy to reach the top of the Earth’s crust.

For complicated geological reasons to do with the actual formation of the rock, not all kimberlites form diamonds. And the ones that do might not necessarily be economic to mine. But while those caveats apply to companies in the early stages of exploration, it’s also true that the world’s richest diamonds mines, with one or two exceptions, are based around kimberlite pipes.

One example is Jwaneng in Botswana, the richest diamond mine in the world, which is located on three kimberlite pipes that converge near the surface.

And just because they are called pipes does not mean they are small. The Kimberly pipe, for example, was mined underground to a depth of around 1,097 metres until operations stopped in 1914.

Secondary source

A secondary source of diamonds is dykes, which are usually formed when the upward thrust of the molten kimberlite is hindered in some way and the magma splinters out into smaller streams. These dykes can be equally capable of forming diamonds, but the erratic nature of their formation means they can be extremely difficult to mine effectively.

However, diamonds and geological time sometimes interact in surprising ways.

The surrounding kimberlite can get eroded, separating out the diamonds, particularly if there is an ancient watercourse in the area. In such cases, the diamonds are often transported in river streams and mixed in with other pebbles and silt. These are what are known as alluvial diamonds, and the effects of geological time can be so powerful that connecting them back up to the source may be impossible.

Alluvial diamonds are found in all the major diamond producing regions of the world, and in a few areas where kimberlites are unknown. A famous example is the Marange deposit in Zimbabwe, one of the world’s richest alluvial deposits, and the subject of much fighting and conflict in recent years.

Given alluvial diamonds are often easier to retrieve than kimberlite diamonds, they are also more likely to be used to fund the activity of warlords and other military factions in conflicts, earning them the label ‘blood diamonds’.

Examples have included civil wars in countries such as Sierra Leone, Angola, and Liberia.

View full GEMD profile View Profile

Gem Diamonds Timeline

Related Articles

July 24 2018
If it does decide to list in London, Fura will fill the coloured gemstone gap left by the departure of Gemfields
March 18 2019
Dunnedin Ventures is building up a copper exploration portfolio
December 31 2018
Bluerock is looking to boost output at Kareevlei by opening up new pits and by bringing new pipes into production
Copyright ©, 2019. All Rights Reserved - Proactive Investors North America Inc., Proactive Investors LLC

Market Indices, Commodities and Regulatory News Headlines copyright © Morningstar. Data delayed 15 minutes unless otherwise indicated. Terms of use