World’s largest new diamond mine begins commercial production

Harry Winston Diamond shares fell 11 cents on Friday despite a successful Q3 production report. The company (TSX:HW, NYSE:HWD) said it processed 3% more ore at its 40%-owned Diavik Diamond Mine in the Canadian north, producing 1.9 million carats from 0.6 million tonnes of ore. That translates to an 8% increase in recovered carats from the same period in 2010 due to higher processed ore grades, says Harry Winston.

Venturebeat reports De Beers has set up investment offices in Silicon Valley to find and fund synthetic diamond startups through the investment arm of a subsidiary Element Six. Element Six Ventures has already funded a number of startups that use synthetic diamonds in the semiconductor industry and other manufacturing processes. Its new office will be in a Santa Clara, Calif. location that will also house a new production site. Synthetic diamond is a surprisingly mature business – the first synthesis of synthetic diamond was achieved by a high pressure, high temperature process in 1953 and 7 years later these processes were commercialized and volume manufacturing started in South Africa in 1960.

News reports on Saturday say Rio Tinto's Zimbabwe subsidiary Murowa Diamonds has ceded 51% of its equity to comply with a new law that requires Zimbabweans to own the majority of foreign companies. Rio Tinto says on its website it has completed a feasibility study and received environmental go-ahead to expand Murowa production 8-fold at a cost of $200 million. Saturday's report cast serious doubts on whether the investment, which requires foreign capital, would now be made. It appeared in recent weeks as if Zimbabwe was soft-pedalling the indigenization laws, but Rio Tinto's capitulation has now put pressure on Impala Platinum, struggling to hold onto its $20 billion worth of reserves in the country.

IDEX Online News reports the rough diamond market is in a rut and demand for rough is so limited, that traders are not buying goods, even if offered at 12 or even 13 percent below what DTC's roughly 80 selected clients – called Sightholders – paid for at last week's Sight. Traders cannot move it, and manufacturers claim that with the current decline in polished prices they will lose money. IDEX says from a low cost supplier, DTC – the rough diamond sales and distribution arm of De Beers – has ascended to the pricier side of the list, alongside Russia's Alrosa. Many lots also went unsold at BHP Billiton's latest tender and Diamdel's auction, with bids falling short of the reserve prices.

AFP reports a blue-and-white Ming vase fetched nearly $22 million in Hong Kong on Wednesday, setting a new record at auction for porcelain from the 15th century Chinese dynasty. The vase went for more than double the lower pre-sale estimate, but at Sotheby's jewels and jadeite auction held at the same time the 9.27-carat Golconda Pink diamond with an estimate of $13 million – $19 million went unsold. Hong Kong is now the world's third-largest auction centre after New York and London, thanks to China's rapidly growing number of millionaires.

MarketWatch takes an in-depth look at the $72 billion global polished diamond trade and finds a distinct lack of pricing clarity and a deeply flawed system that have somehow endured for decades.

IDEX reports on Wednesday Sotheby's is auctioning a 9.27-carats fancy vivid pink emerald-cut diamond at a sale that will likely attract collectors that have not seen such stones auctioned for a while. Collectors and dealers have paid top prices for exceptional diamonds at auctions in Hong Kong, repeatedly setting record prices, but offerings like the rare VVS1 clarity pink diamond carrying a pre-sale estimate price of $12.8-$19.2 million, have been scarce recently. If the gem sales at the upper end of the range it could set a new per carat record of $2 million-plus.

The Zimbabwe Guardian reports that at least 137 mining companies are risking losing their mining licences for refusing to comply with the country's new indigenization regulations. Affected companies include Anglo-American, Murowa Diamonds and Metallon Gold, according to the newspaper, which notes that 38 companies have complied. The government of Zimbabwe, the country with the largest platinum reserves outside number one producer South Africa, is demanding 51% of all foreign-owned mines operating in the country under its so-called indigenization laws.

One shouldn't compare pears and squares but there is no better indication that coloured diamonds are spearheading record auction prices than news that a yellow weighing slightly less than the 33-carat flawless D-colour Liz Taylor wore every day, is expected to fetch three time as much as the Hollywood legend's gem when it goes on sale next month.