TO say that Rio Tinto’s Argyle mine is a diamond in the rough may be a bit of a stretch, but with ramped-up underground mining and the installation of a massive new underground system for harvesting the gems, the overall operation is set to shine even brighter.
Argyle will then add another ‘world’s biggest’ to its impressive reputation: already one of the largest producers of diamonds in terms of sheer volume, at about 20 million carats per annum, the East Kimberley mine looks to maintain that output as it transitions from an open-pit venture to an operation that will include the biggest mechanical system of its kind, built by Swiss precision engineering and manufacturing company Sandvik.
Since being commissioned in 1985, Argyle has produced more than 790 million carats of rough diamonds. Its peak year was 1994, when it yielded 42.8 million carats, and through 2011 the mine generated a total of
more than US$6 billion in revenue. It is 100 per cent owned by Rio and operated by the mining giant’s Rio Tinto Diamonds division.
Argyle is also the world’s largest producer of coloured diamonds, including champagne, cognac, grey and one of the rarest of all: pink. These last are cut and polished in Perth, while the rest are sold predominantly in their rough form.
More than 90 per cent of the world’s pink diamonds come from the Argyle mine, and these rosy gems fetch about 20 times the price of comparable white diamonds. The mine’s red diamonds – the rarest of all colours – fetch an even greater multiple.
While the market for other resources has been volatile, the demand for pink diamonds remains rock solid.
“The market for Argyle pink diamonds is very robust. We have just concluded our annual Argyle Pink Diamond Tender, which delivered an exceptional result and is indicative of the strong global appeal,” Argyle Pink Diamonds manager Josephine Johnson said.
“This very niche part of the business continues to defy gravity and outweigh major equity indices.”
The tender is an annual event in which only about 50 of the very best of the 600 million or so stones produced by the mine are on offer. Private customers can bid on these exceptional gems: they are not available to
the public.
On average, 40 or 50 carats in total are sold at each year’s tender, with prices as high as US$1 million per carat.
This year, a 12.76 carat rough pink diamond was found at Argyle – the largest ever discovered in Australia. The diamond was cut and polished down to 8 carats due to an internal fault that precluded further cutting, and Rio Tinto donated the partially finished stone to Museum Victoria.
For much of its life, Argyle has been an open pit operation, but as early as 2001, the company realised that the mine’s future lay underground.
In December 2005, Rio received the go-ahead for an expansion project that involved construction of a block cave mine.
The company approved an $803 million investment in September 2010 to ramp up the project; the plan was to move Argyle’s operations completely underground in 2013, which also would extend the project’s full life until at least 2020.
According to Rio, block cave mining is an attractive option for a couple of reasons: it is both safe and relatively low-cost. The method involves undercutting the ore body and allowing it to break up or ‘cave’ under its
own weight, removing the need for blasting Argyle will be the first mine in WA to use the method and only one of a handful of mines in the whole country.
The mine is in the advanced stages of construction, with about 40km of tunnels and the installation of two underground crushers completed. A 2.2km underground conveyor will connect with a 1.2km belt above ground to transport ore.
Earlier this year, Argyle general manager operations Shane Johnson told The Australian Mining Review that the project was expected to be completed by the first half of 2013 and would produce about 9 million
tonnes of ore per year once in full production.
Mr Johnson said that Argyle was one of the biggest underground mining projects in Australia, but that its scale and complexity were challenges that the company was able to meet.
“The block cave at Argyle is an immense engineering and geophysical challenge, and we are comfortable that it is on track for completion by the end of 2013 within the current budget,” he said.
The new AutoMine system will play a significant role in the operations. According to Sandvik, the machine guidance and control system were scheduled to go online by the end of the current financial year.
“The AutoMine draw control and AutoMine loading systems are ideally suited for Argyle’s block caving operation,” Sandvik Mining Mine Automation vice president Riku Pulli said.
“We are honoured that Rio Tinto has put their confidence in our AutoMine system to improve their operation safety and efficiency.”
The underground mine will be next to and under the existing open-cut mine, and will access the AK1 ore body.
Staff on the surface will control the underground machinery, which will include 11 electric and two diesel loaders. Sixteen extraction drives also will be employed to enable the mine to meet its ore production target, and the system’s capabilities enable it to track production.
The block cave mining technique is expected to produce about 20 million carats per year during the block cave’s life.
Open pit
Argyle’s open-pit mining history dates back several decades. For Rio, it began in 1976 with exploration of the site. The discovery of several small stones in 1979 led to the bountiful diamond-bearing pipe that is the
source of the mine’s above-ground operations.
Rio secured a lease for the land and alluvial mining in the area began in 1983, while the mine was under construction. It was commissioned in December 1985. Initially, the mine’s open pit was mistakenly named Argyle kimberlite 1 (referred to as AK1) by geologists who first thought the diamond-bearing rock was kimberlite.
Although the mineralisation was soon discovered to instead be lamproite, the diamond-bearing pipes of ore in the area had already been identified and numbered sequentially, so the AK1 moniker stuck. The AK1 pipe, being the most viable, became the source of the 2km-long and 1km-wide open pit. It covers almost 300 hectares.
The Argyle mine operates around the clock, and the principal pit activity is the removal of overburden and the collection of diamondiferous ore, which is broken up by explosives. Each blast hole liberates about
3000t of rock.
The diamond-bearing ore is trucked about 2.5km to a primary crusher, where the extraction process begins in the main recovery plant. 2012 performance According to Rio’s half-yearly report released in July, its Diamonds and Minerals group’s underlying earnings of $203 million were 107 per cent higher than those for the first half of 2011. The group benefitted from higher prices for industrial minerals and increased diamond production.
Although the crown jewel in its diamond holdings is Argyle, Rio also owns a 60 per cent share of the Diavik mine in Canada, 78 per cent of the Murowa mine in Zimbabwe and 100 per cent of the Bunder project in India.While the report did not break down results for individual mines, it noted that first-half 2012 diamond production at Argyle was 24 per cent higher than during the corresponding period in 2011. Heavy rains and flooding in March 2011 impacted results.
The demand for rough diamonds saw a modest slowdown in the first half of 2012 across new and emerging markets, but the long-term outlook remained robust. A company spokeswoman said that all of Argyle’s gems were cut, polished, and destined for established and emerging retail diamond jewellery markets around the world.
Rio’s production guidance for the year was expected to be 14.6 million carats of diamonds.
2013 outlook
Underground production is expected to begin in the first half of 2013 and reach full capacity in 2014.The demand for diamonds is expected to grow worldwide, driven by markets in India and China. Those two countries accounted for about 20 per cent of the global jewellery market in 2012, and that percentage is expected to double to 40 by 2020.
The very fact of their scarcity means that the market for pink diamonds is unlikely to cool. Many people buy them for investment purposes, and the law of supply and demand comes into play.
Experts in the gem industry point out that during recent years the price of coloured diamonds has grown significantly, driven by a greater variety of hues becoming desirable.
As diamond jeweller Olivar Musson of Sydney-based Musson Jewellers told an industry publication after the discovery of the 12.76-carat Argyle Pink Jubilee this year, such a find is likely to pique people’s interest in the stones.
“News like this is bound to create fabulous hype in the market and for those who know pinks, well, they want more,” Mr Musson said. He added that the biggest difference between Argyle pink diamonds and foreign pinks were colour and clarity.
“Argyle produces the pure pink diamonds with purple hues and deeper intensities,” he said.
“The Australian product always outperforms the foreign pink in per-carat prices achieved.”