These diamonds aren’t forever

A pink diamond love affair

“Pink diamonds burst into the public consciousness in 2002, when Ben Affleck gave Jennifer Lopez a six-carat pink rock for an engagement ring, going against the prevailing trend for white diamond rings.

“For the past few decades about 90 per cent of the world’s pink and red diamonds have come from the Argyle deposit, which was discovered in 1979. Rio’s explorers had spent the better part of a decade tracing the mine’s seam before a geologist stumbled on a diamond in a termite hill. As clues go, it was a pretty good one.

“The mine began producing in the mid-1980s and Rio set about cultivating Argyle Pink as a brand name. It was a surprising move for the miner, which is not exactly a luxury powerhouse; it makes most of its money digging up iron ore to sell to China.

“Each year a crop of Argyle pinks are sold in a private tender – but the writing has been on the wall for the brand. By the 2010s the mine was becoming depleted and it closed for good in 2020. The stones on display in Geneva this month represented almost the last batch.

“As Argyle diamonds have become more scarce, prices have jumped, outperforming their white cousins and even many stock markets.”

How do you price a pink diamond?

“The pressure was on, then, in Geneva for buyers to come up with a knockout bid for the remaining diamonds. Under the rules of the tender, bidders have just an hour and a half to view the merchandise, and then they have to decide which stones to bid for and how much, while having no clue what their rivals may pay.

“’It’s subject to a lot of intrigue, a lot of second guessing and a lot of game theory,’ said Patrick Coppens, general sales manager at Rio.

“About 80 bidders have been invited to view the diamonds in Geneva, Belgium and Australia this year. In past tenders, some brave souls have tabled bids for the entire catalogue. Rio spends a day or so crunching the numbers to work out who has won, and then the phone calls go out.”

No shortage of buyers

“Rio and its buyers insist there is no shortage of willing customers for these stones. ‘What we know from cars, wines or paintings is that if you buy the best of the best there will always be customers for that, regardless of recessions,’ said Ulrik Hartmann, founder of the Copenhagen-based Hartmanns jewellers, another bidder.

“Once the Argyle supply runs out all the pink diamond trade will be in a second-hand market, which Rio is keen to facilitate by recertifying old diamonds as genuine Argyle products and boosting their resale value.

“Diamonds are still a niche pursuit for Rio: sales in the division hit £800 million last year, paling by comparison with its bulk commodities arm…. Rio’s only other diamond mine is Diavik in Canada, which produces white diamonds and a few rare yellow stones. It, too, is winding down and is slated to close in 2026.”

Scouting for new mines is getting harder

“Rio is scouting for new prospects in Canada and Angola.

‘Finding new mines is getting harder for sure,’ said Sinead Kaufman, chief executive of its minerals division.

‘And the rarity is something that we can see increasing over time for all natural diamonds.’

“Diamond dealers hope that rarity will support demand even as the market faces stiff competition from synthetic diamonds, which are chemically identical but grown in a lab and cost a good deal less.

“As for what makes a diamond pink, no one is exactly sure. All natural diamonds are forged over millions of years under intense heat and pressure. The present theory is that tectonic shifts in the distant past – say, during the break-up of mega continents – fractured the diamonds’ lattice and created the reddish hue, which only becomes clear when it is cut and polished.”

Reds and pinks are cut to sparkle

“But just what are pink diamonds like up close? Under the lens of a diamond dealer’s loupe, the intricate cuts of each stone are perfectly clear. Small shards of red and pink flash like spotlights out of the gem. From a distance, they sparkle only fitfully. And the Argyle diamonds in this latest batch are really very small.

“It is enough to keep buyers such as Jody Wainwright, director of the family-owned jeweller Boodles hooked.

‘How do you price a pink diamond?’ he asked. It was a problem he was shortly to face, as he sat down in the Geneva hotel room with pen and paper to do his sums.

‘It’s more like pricing a work of art.’”