Uncertainty over the Argyle mine’s future, as well as growing appreciation for rare pink diamonds among the super-rich, is prompting a surge in the value of these coloured stones even as the price of traditional white diamonds falls on world markets.
A 9.14 carat pink pear-shaped diamond is expected to realise $16m-$18m when it is auctioned at Christies in Geneva next week.
“Pink diamond prices have tripled over the past 15 years and on average would be at least 25 to 30 times the value of white diamonds,” says David Fardon, chief executive of Linneys, one of 35 ateliers mandated to buy coloured diamonds from Argyle.
By comparison, global sales of diamond jewellery fell in 2015 for the first time in six years, declining 2 per cent to $79bn. Sales of rough diamonds fell 30 per cent.
Mr Fardon says the scarcity of coloured pink, red and violet diamonds mined at Argyle has enabled them to buck the downward trend in diamond prices. He says they have become a collectable item, with some of his clients buying the stones to include as part of their retirement savings fund.
Prices are rising 15 per cent a year because of increasing awareness of rare coloured diamonds, growing demand from China and India and the fact production at the Argyle mine is only guaranteed until 2020, says Mr Fardon.
In 2013 Rio said it was extending Argyle’s life until 2020 by building an underground extension to the existing open-cut mine. But it is uncertain whether Rio will sanction any new investment to extend the Argyle mine’s life beyond that date, in part because the valuable pink diamonds make up a small fraction of the mine’s total output.
“The odds are the mine will close a year or two after that, which means these stones will become more and more valuable,” says Mr West, one of the world’s most prodigious buyers’ of Argyle pinks.
Mr West says he plans to show the Argyle Violet in an exhibition at the Museum of Natural History in Los Angeles to raise awareness of coloured diamonds.
“It’s important to let the public see them and get the word out. That can only add value to the market,” he says.