How are ​Diamonds Mined, Processed, and Traded?

How are ​Diamonds Mined, Processed, and Traded?

How are ​Diamonds Mined, Processed, and Traded?

Posted by Sharif Khan on 9th Nov 2015

How are diamonds mined, processed and traded?

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Diamonds are among the most valuable gemstones that many people desire for its hardness and sparkling quality. Diamonds have been used as adornments since ancient times, and were probably first used in Ancient India. The initial diamond trade route was from east to west India, until the stone was discovered in Brazil creating new diamond trade routes. The first diamond official mining began in Kimberley, South Africa after the first discovery of diamonds in the country took place in the banks of Orange River. This was aptly called the Eureka Diamond, and it started the diamond mining industry in South Africa.

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Currently, there are only 38 known diamond mining companies around the world, located in several countries in Africa, Asia, North America, and Oceanic. The world’s largest and most extensive diamond company is the De Beers, which has been synonymous with diamonds and has been operating for 125 years. Although the De Beers has earned a negative reputation for its domination of the diamond mining, processing, and trade for so many years, it has been instrumental in establishing mining companies in several countries that now enjoy the economic growth that the precious commodity it has given to them. They are still in the leading position in the business of diamond mining and production, and would be very hard to overthrow in terms of mining and processing facilities and experience.

Half of the world’s largest diamond mines are found in Russia, while the world’s biggest diamond mine and richest in terms of value is found in Botswana. Some of the world’s largest diamond deposits are mostly concentrated in several regions, as diamond is a natural resource that is produced only under specific pressure and temperature conditions in the earth’s mantle. They are sourced either in open-pit mines, underground mines or alluvial mines, where they have eroded from the ground and deposited by water or weather.

Here are some of the countries with the largest diamond mines:

The African continent contains huge deposits of precious metals and gems which are mined and generate a sizeable profit. Africa contains half of the mines located outside of Russia and two-third of the diamond resources in the world. There are diamond mines in Angola, Botswana, South Africa, Congo, Ghana, Guinea, Lesotho, Namibia, Sierra Leone, Tanzania, Zambia, and Zimbabwe.

In Asia, Russia, China, Indonesia, Malaysia, and India all have diamond mines or facilities in operation.

In North America, Canada and the United States both have operational diamond mines.

In South America, Brazil, Venezuela and Guyana are the only countries with alluvial diamond mines. Exploration companies have made intensified efforts in Brazil to locate and assess the several identified kimberlitic and alluvial deposits found in the Mato Grosso State.

Russia is the largest diamond producing country in the world, contributing 25% of the world’s total supply. ALROSA is the leading diamond company in Russia, which is accounted for 97% of the country’s production.

Botswana is the biggest producer of diamonds in terms of value, which accounts for 20% of the global supply.

The top ten diamond producing countries in the world are the following:

  1. Russia 22.4%
  2. Botswana 19.9%
  3. Congo 18.6%
  4. Australia 13.2%
  5. South Africa 9.10%
  6. Canada 8.10%
  7. Angola 4.80%
  8. Namibia 1.30%
  9. Ghana .60%
  10. Brazil .40%

Leading Diamond Companies in the World:

1. De Beers has been synonymous with diamonds for their domination of the diamond mining and selling for over the past 100 years. De beers controlled the prices and distribution of diamonds in the world until 2000 their control on diamonds began to break. Diamond producers from Russia, Canada, and Australia have decided to sell directly to the manufacturers without going through De Beers as middleman. This paved the way for diamond mining companies to become major key players in the industry, however, the De Beers still remains to be the undisputed leader when it comes to the diamond mining and manufacturing business.

De Beers also owns the Diamond Trading Company, which sells and distributes rough diamonds, as well as De Beers Diamond Jewelers Ltd. which it co-owns with the famous brand Louis Vuitton Moët Hennessy Group (LVMH). De Beers sells its diamonds through the LVMH after having it polished and set into jewelries. In several countries in Africa, De Beers co-owns diamond mines through deals with the government.

2. ALROSA is one of the few companies that are close to been a competitor to the De Beers, with their discovery of the Verhne-Munskoye mine in 2007. The company currently operates from 16 kimberlite pipes and 16 alluvial mines. It also has operations in nine countries and in ten regions in Russia. The company accounts for more than 25% of the world’s diamond output in terms of carats. 95% of Russia’s total diamond production is done through ALROSA.

From ALROSA’s mines, preliminary sorting and valuation of the mined diamonds is done first in their Diamond Sorting Center which is in Mirny. The initial valuation of these diamonds takes place in three different locations, at ALROSA’s United Selling Organization in Moscow, the Kommeral Company which is in Mirny, and at Yakutsk Diamond Trading Enterprise which is in Yakutsk. The smallest diamonds mined are separated at the preliminary sorting and sent to the Kommeral Company where they are sold as industrial diamonds or manufactured into diamond powder.

3. Rio Tinto Group is another major diamond producer and the principal producer of natural F colored diamonds in the world. It has been in the industry since 1979, and is currently operating two diamond mines, in Australia and Canada, and is currently developing another mine in India. Rio Tinto used to operate the Murowa Diamond Mine near Zvishavane in Zimbabwe, until 2015 when it sold its shares to a Zimbabwean mining company.

Rio Tinto is primarily in mining, selling and marketing mostly rough or uncut diamonds. It is also known for the Argyle pink diamonds which are mined from Western Australia. Most of the diamonds from this mine are cut and polished for jewelry purposes. The rare pink Argyle diamond is primarily sourced in this mine, and has become the trademark stone of the company. Their second mine, Diavik mine in the Northwest Territories in Canada, produces some of the most coveted high grade diamonds in the world possessing good shape and great clarity. The diamonds mined in Rio’s facilities are sorted in the Antwerp, Belgium and sent to Perth, Australia where they are cut and polished. The polished stones are then sold in diamond markets in the US, Hong Kong and India.

4. Debswana Diamond Company Ltd. is the world’s leading diamond producing company in terms of value and the second largest in terms of volume. It is a Botswanan company operating four mines in Orapa, Jwaneng, Lethalkane, and Damtshaa. It is co-owned by the Botswana government and the De Beers Group. Debswana has been instrumental in uplifting the economy of Botswana, helping the country rise from being one of Africa’s poorest to its current status as a middle-income nation.

Diamonds mined in the Orapa and Jwaneng sites are sorted in state of the art facilities inside the mining compounds. Similar facilities are already being installed in all of Debswana’s other mines.

Diamonds produced by Debswana are sold through the Diamond Trading Company of De Beers. De Beers sells them to clients at events called “sights” held in Gaborone.

5. The Dominion Diamond Corporation (DDC) is a Canadian company operating two mines in Diavik and Ekati. DDC is formerly the Harry Winston Diamond Corporation, which was completely bought by Aber Diamond Corporation in 2006.This eventually became the Dominion Diamond Corporation that it is today.

DDC’s mines in Diavik is co-operated with the Rio Tinto Group, although DDC has sole ownership of the mine. Its diamonds are sent to its sorting facilities in Toronto for sorted according to clarity, color, weight, and shape. They are then shipped to the Antwerp and Mumbai sales offices, where up to 75% of their diamonds are put up for sale at the open markets. One of DDC’s famous clients is Tiffany & Co, America’s premier house of jewelries. DDC is the world’s third biggest provider of rough diamonds in terms of value.

Diamond Trading Centers:

The city of Antwerp in Belgium is the world’s trade center of diamond. It is home to more than 1,500 diamond companies, including rough diamond traders, manufacturers, dealers and sellers of polished diamonds. An estimated 80% of the total rough diamonds in the world are handled in this city, which accounts for €30 billion of its annual income. This is why Antwerp is known as the Diamond capital of the world.

Although Antwerp mostly controls the production and marketing of diamonds, there are also large diamond trading centers in the Indian cities of Surat and Mumbai. Israel is also a trade center, which mainly supplies diamonds to North America. In the Middle East, Dubai acts as the distribution hub in the region. In the US, New York remains to be the primary port where diamonds are brought into the country, and is currently the largest diamond market in the world. It is where an estimated 80% of the diamonds in the world are sold.