Professional Jeweler Archive: Rough & Tumble

November 2004


Rough & Tumble

Today's diamonds come from many suppliers in a world that can be very risky or very rewarding

Sourcing diamonds is not for the faint-hearted along any portion of the diamond pipeline. Consider the situation of the following four groups. Independent miners working along the riverbanks in northeastern Angola, for example, face the prospect of being robbed or cheated by their peers or bitten by vipers or malaria-toting mosquitoes.

Large mining companies in some countries worry about the security of their tenure in unstableregimes, contamination by conflict diamonds and local statutes that make profitable mining uncertain. Many have taken on the additional responsibility of best-business practices that benefit local workers, provide governments with tax revenue and address environmental impact from mining.

Diamantaires wonder about the constancy of supply, the strength and integrity of their suppliers, where to obtain financing and how to steer clear of conflict diamonds.

Retailers are concerned about all of these and other issues, such as how a diamond is cut, competition from Web-based sellers and how to keep up with increasingly informed customers.

A Rough Diamond Seminar sponsored by the Israel Diamond Institute in Ramat Gan, Israel, the country’s main center for cutting and trading diamonds, discussed these and other issues. It also shed light on some interesting diamond producers. Following is an overview of some of them.


When Angola’s 27-year-old civil war ended in 2002, the country became much more attractive to outside companies. That was good news for Endiama, the state-run diamond company. De Beers and others are seeking to negotiate mining exploration and mining rights with the government. Some others – including the Leviev Group – already mine, buy and sell Angola’s diamonds (Professional Jeweler, October 2004, p. 24).

The future looks bright. Angola has identified six new kimberlite pipes (a geological formation that can indicate the presence of diamonds) and 1,000 more kimberlites require further exploration, says Dr. Manuel Arnaldo de Sousa Calado, chairman of Endiama.

Angola’s most prolific diamond occurrences are alluvial (dry riverbeds). These combined with kimberlite mines produce 6 million carats of rough diamonds annually, with an income of about $US8 billion, says Calado. Angola plans to increase that amount to 15 million carats annually by 2010. “There are significant investment opportunities in alluvial and mining operations, as well as in parallel businesses such as banking for diamond operations,” he says. “Investment in alluvial mining operations starts at about $US500 million.”

Stornoway Diamonds/Canada

Eira Thomas, CEO and president of Stornoway Diamonds, is one of the youngest and most successful geologists in Canada. Her experience and track record have become part of Canadian diamond history. Her exploration team discovered the Diavik pipe in 1994, after which she became vice president of Aber Resources, which developed the mine with Rio Tinto. She remains a director of Aber Resources.

Stornoway, her new company, controls 20 million acres in Canada. “We are in a strong position with a management team, capitalization of $45 million and prospects in several Canadian provinces,” she says.

Among them is Nunavut, in particular the Melville Peninsula, which Thomas says contains significantly diamondiferous kimberlites. Stornoway controls rights to the northernmost part of the peninsula while BHP explores the southern regions. By the end of the year, Thomas expects to control 12 million acres in Nunavut, particularly in a geologic belt called the Tremblay Corridor. During the exploration phase so far, her company has extracted some 6.52 carats of diamonds from 7.4 tons of ore. The largest stone weighed 0.40 carat.

“Canada is relatively unexplored and has a higher-than-average ratio of kimberlite pipes that become major mines,” she says. Stornoway is working with BHP and Shear Exploration in the Churchill Diamond Project along the western coast of the Hudson Bay. There, 10 out of 18 kimberlites have been deemed diamondiferous, says Thomas.

Magna Egoli Diamond Mine/Sierra Leone

The Magna Egoli Mine, Sierra Leone’s largest mechanized mine, is fully owned by Waldman Diamond Resources of Israel. It’s located in the eastern part of the country along the Sewa River, near the Koidu and Tongo diamond regions. “It is unquestionably diamond territory – flying overhead in small aircraft you can see hundreds of diggers panning the rivers,” says Alex Waldman, founder and chairman of the Waldman Group. “They earn subsistence wages and hope for major finds,” noting they are paid guaranteed monthly wages.

Waldman says he instituted good-neighbor policies in working with local tribal chiefs who own access to mining areas. Magna Egoli was instrumental in building a school, makes equipment available to neighboring artisanal diggers and provides transportation to the nearest large city of Bo so miners can stock up on supplies. The mining camp contains housing for miners, a nurse and medical facilities, which also serve the local community.

Sierra Leone became democratic after decades of civil war, he says, and invites diamond investment. “The government prefers mechanized mining to loose diamond digging because there is more control, and diamond theft becomes virtually impossible,” he says.

Magna Egoli started operations in 2001, with development costs expected to reach $8 million by 2005. The mine has an expected life of 10 years, and Waldman expects an estimated annual production of $25 million, with average weight of 0.57 carat and average value of $220 per carat, which is considered very high value for diamond rough. It produces 400 carats of diamonds per day. “While our margins are high, our costs are also very high,” he says. “Huge investments are needed in mechanized mining.”

Rough is exported to Tel Aviv, Israel, for processing after it goes to Freetown for valuation. Waldman Diamond Resources sells assortments to its core customers and also processes and cuts its own diamonds.

Vaaldiam Resources Ltd.
Brazil & Central African Republic

Vaaldiam Resources of Canada mines diamonds in South America and Africa. President and CEO Kenneth Johnson says his company has interests in primary and secondary (alluvial) diamond deposits. It has mineral-bearing properties at Pimenta Bueno in Brazil, partly as a joint venture with Rio Tinto, as well as Kimberlite and Haute Kotto projects in the Central African Republic.
“We produce 10,000 carats per year at Pimenta Bueno valued at about $150-$180 per carat.” The property holds promise: 32 kimberlite pipes have been discovered so far. He calls Brazil a new frontier for diamond exploration and mining because it has a stable government and good infrastructure and is underexplored for mineral resources. “The geologic environment is similar to Canada’s diamond-rich Slave craton,” he says.

Pimenta Bueno is in Rondonia State, not far from Brazil’s western border with Bolivia. Johnson says the Lajes Kimberlite project in Pimenta Bueno is expected to produce 1 million carats by the end of 2004, mostly through manual and semimechanized operations. Two significant diamonds weighing over 10 carats have been found so far. Johnson says the Pimenta Bueno district has the promise of being the most significant find in South America.

In the Central African Republic, Vaaldiam has an exploration permit for 2,000 square miles, an area that includes nine alluvial diamond deposits. Through artisanal mining, Vaaldiam produces 25,000 carats per year valued at $200-$225 per carat. Vaaldiam says the region has excellent potential for the discovery of kimberlites.

– by Robert Weldon, G.G.

As the world’s demand for diamonds intensifies, exploration for new sources heats up. Photo by Robert Weldon.
Large diamond mining companies hold greater promise for artisanal miners, like these in Sierra Leone, because of steady income, housing and hospitals. Photo by Waldman Diamond Resources, Tel Aviv, Israel.

Copyright © 2004 by Bond Communications