Resource Snapshot (9): Diamonds

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Sources, Applications & Characteristics

Diamond crystals are formed deep within the earth mantle where carbon is exposed to extreme pressure and very high temperatures. They are conveyed to the earth’s surface through kimberlite and lamproite pipes (volcanic pipes composed of magma). Diamonds can be mined in four different ways, including open-pit mining, underground mining, alluvial mining and offshore mining.[1]

Diamonds, source: mining.com

Around 50% of mined diamonds are used in the jewelry business.[2] Due to their unique carbon composition and shining appearance, diamonds have always been perceived as very powerful stones. The word “diamond” derives from the Greek word “adamas” meaning unconquerable or invincible.[3] It is therefore no surprise that diamonds are used, in combination with other precious metals such as Gold or Silver, for engagement or wedding rings.

The remaining diamonds, so called “bort” stones, are used for industrial applications including cutting, drilling, grinding and polishing.[4] Industry values diamonds for their superlative physical qualities including exceptional hardness, thermal conductivity and optical dispersion. With a score of 10 on the Mohs mineral hardness scale, diamonds reach the highest possible ranking, making it one of the hardest natural substances on earth.[5] Diamonds are also one of the best heat conductors with a melting point of over 3500°C.[6] Finally, diamonds are famous for their luminescence, having a refraction rate of nearly 2.42.[7]

Fine diamond jewelry, source: cerebrodegordo.com

Economic dimension[8]

In 2010 the world diamond production resulted in a volume of 133 million carats (carat is a unit of weight, one carat = 200 milligrams) equaling a value of $12 billion. The main diamond producing areas are Africa (mainly South Africa and Botswana), Russia, Canada and Australia. The USA is still the largest consumer of diamond jewelry but is followed by the fast growing diamond jewelry markets in China and India. India is also the largest diamond jewelry manufacturer with a manufacturing volume of $28 billion.

There exists no official set of diamond prices. Prices are rather set by major diamond producers. Yet, indexes exist, where price developments can be analyzed and forecasted. As can be seen from the graph below, rough-diamond prices showed a steady growth trend of about 3 percent per year. In 2008, due to the economic crises, diamond prices dropped dramatically. In less than three years, however, diamond prices recovered to reach their former level and are supposed to increase in the future.

Environmental dimension[9]

Diamond mining can have severe impacts on the environment. In general, diamond mining starts with a “gold rush”. As a result, trees and vegetation are often hastily cut down to clear the area for excavation and making space for shelter and roads for transportation. These processes tend to accelerate deforestation and eventually lead to the erosion of the earth’s surface.

Diamond mine, source: huffingtonpost.com

During mining operations, local water quality can be affected as sediments from operations end up in ground water which has negative effects on aquatic plants and fish species. According to the World Diamond Council, however, diamond mining does not use hazardous material for extraction, unlike other industrial processes and types of mining.[10] Mining operations are accompanied by frequent noise pollutions which can disturb local bird species and lower air quality due to the high amount of dust that is evaporated through operations.

One of the most lasting environmental damages occurs by abandoned mine sites. After several years of mining operations, the affected sites are often characterized by large tracts of degraded land. Without proper land reclamation initiatives, these areas are lost for other uses, e.g. agriculture. Especially for poor African states like Sierra Leone, where approximately 75% of the land area is used for mineral exploration, land degradation has severe effects on the national food supply. Low agricultural productivity combined with a rapid population growth can eventually lead to social instability.

Social dimension

The film “Blood Diamond” (2006) with Leonardo DiCaprio raised awareness for the civil war that raged in Sierra Leone from 1991 to 2002. Like the film described, diamonds both financed and fueled the conflict that lead to thousands of deaths. The Southern African diamond-producing states initiated therefore the Kimberley Process in 2000 in order to control the trade of conflict diamonds throughout the value chain. In 2003 the Kimberley Process Certification Scheme (KPCS) was established by United Nations in corporation with the diamond industry and civil society organizations.[11] According to the World Diamond Council, 99% of diamonds are nowadays sold from conflict free sources.[12]

The diamond industry together with the help of the Kimberley Process has also helped to stabilise fragile countries and support their social and economic development.[13] Ensuring legal export of diamonds had significant positive effects on local economic activities and increased the national foreign exchange earnings. Nevertheless, diamond mining has also negative social effects, especially on the local communities near mining sites. Some communities have to be displaced in order to build a mining site. The loss of their land is often accompanied by a loss of cultural heritage sites. Other social impacts include social conflicts due to migration of mine workers, unemployment in case of a mine closure and health and safety risks during mining operations (especially for informal diamond diggers).[14]

Diamonds extraction, source: pro-share.net

 Outlook

An alternative to natural diamonds are synthetic diamonds that are produced by artificial processes. According to Ali (2011), there exist two key methods for making synthetic diamonds: [15]

• High-Pressure-High Temperature (HPHT)
• Chemical Vapor Deposition (CVD)

Graphite stone is converted into diamonds using the HPHT method. It uses fewer ingredients and is usually faster than CVD making it more suitable for industrial diamond production. CVD involves the use of a hydrocarbon gas mixture. The better control of the properties of the diamond may be one reason for its increased use in gemstone manufacturing.

The social dimension of diamond production (working conditions, social conflicts) may be easier to control using synthetic diamonds. Environmental indicators are, however, more difficult to compare. For example, energy usage varies considerably depending on the geographic location of a mine and the technologies used to mine diamonds and to produce synthetic diamonds.

The future supply of diamonds is expected to rise by up to 23 million carats from 13 new mines by 2020. The global rough-diamond demand is also expected to increase due to a recovery of private consumption levels in developed countries combined with an expanding middle class in China and India.[16]

WRF Resource Snapshot (9) has been compiled by Sascha Bianchi. He would greatly appreciate corrections, suggestions or other remarks, which could improve this document. Suggestions for which other resources to choose for one of the coming WRF Resource Snapshots are also welcome. Sascha or his colleagues can be reached at info@worldresourcesforum.org .