Is Rio Tinto's Argyle mine in Australia the sharpest diamond mine in the business?
     Three years ago, rumours whipped round the market that Argyle was on the brink of closure and that its rare pink stones would soon disappear from supply. Argyle produces 90 per cent of the world's pink diamonds and its open-pit has been in operation since 1983, but as the mine moved underground, its future looked uncertain.
     Pink diamond prices popped higher. “There is rarity value in those stones,” one Antwerp-based dealer told Global Mining Obser-ver at the time. “Generally they'll only go up in value. Argyle pinks are getting increasingly rare.”
     “Dwindling supplies” are “swelling demand,” wrote the Financial Times. The mine is “near-exhaustion” and prices have “increased exponentially... defying economic crises.” Argyle is “running out”, wrote Vogue. “Pink diamonds have been really hot for the last eight years.”
     Prices have continued to climb,

Actress Nicole Kidman, tennis star Anna Kournikova and the Crown Princess of Denmark are all proud owners of diamonds from Argyle. Photos: Rio Tinto, fanzone, Christie's

Actress Nicole Kidman, tennis star Anna Kournikova and the Crown Princess of Denmark are all proud owners of diamonds from Argyle. Photos: Rio Tinto, fanzone, Christie's

but the mine's closure date has been quietly pushed out from 2018 to 2020 and output has jumped to a new all-time high. Far from winding down, Argyle is extending its lead as the world's largest diamond mine by carats.
     Have rising prices made Argyle viable for longer, or is Rio mischievously peddling talk of its possible closure, to hype prices and its own margins?
     Rio certainly plays to the

market. Argyle's best diamonds are reserved for an annual tender, which is previewed at secret locations in London, Tokyo and Geneva. Bids are confidential and even the catalogue is difficult to get hold of. Heightening the drama, five days before bidding closed at last year's tender, Argyle issued a statement announcing an unexpected plant shutdown.
     Rio does not disclose Argyle's sales figures, which are treated as a commercial secret. The only detail it has recently given is that bidding involves “lots of zeros.” But netting-off Rio's total diamond sales against those of its Diavik

mine in Canada, which are published by Diavik's co-owner, and Argyle's figures can be glimpsed. They suggest the mine is pushing on towards becoming a $500m business. And in line with ballooning production, sales are rising quickly.
     Nor is there any indication that Rio will close the mine anytime soon. It recently extended its mining lease until 2025 and invested $2bn, expanding underground. Argyle also boasts a reserve base of 98m carats, making it three times larger than Diavik. “We're invested through until 2020 and we're seeing what will happen after that,” Rio's head of diamonds said at an auction preview at the Sydney Opera House last year.
     In the meantime, Rio is in the beautiful position of being able to talk pink diamond prices higher, simply by sounding relaxed about the mine's closure. Next week it is due to announce its diamond sales, buried in its full-year results. The better they are for Argyle, the less fuss will be made.

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