The global diamond mining industry is currently under extreme pressure. This is possibly the most challenging period yet faced by the global diamond mining business, as product inventories have risen and prices fallen. As a result, the sector is experiencing serious difficulties. Since late 2008, production has been suspended at some of the world’s largest and (previously) most profitable diamond mines:

• The industry has fragmented considerably over the last ten years; numerous new entrants have arrived in the sector

• For many miners, tough market conditions have arrived at a particularly inopportune moment; just as they are implementing expensive expansion and life extension plans

• Many of the more recent entrants into the business have only recently raised significant amounts of debt and equity finance, acquired mines and projects or commissioned new mines

• Operating cost rises, which have impacted across the breadth of the mining sector, are yet to unwind, squeezing margins still further

• Over the medium term the industry cost structure is undergoing radical change, as existing mines mature

• Many are switching from open pit to underground mining, or exploiting smaller, lower grade satellite orebodies; substantial changes in mine economics will occur as a result.

Alongside these challenges, the current situation undoubtedly presents unique opportunities for some players. A new study from GFMS Mine Economics aims to identify and quantify these. This study clearly identifies and quantifies:

• Which mines are profitable under different market outcomes
• What is the impact of low prices on the future production profile, in terms of volume and value?
• What diamond prices are needed for projects to generate acceptable financial returns?
• When the market recovers, which mines and projects present the best restart and expansion opportunities?

Based on a stringent methodology for analysing mine economics, the analysis in this study is derived from ‘bottom-up’ analysis of mine productivity, energy use, mining and processing costs, making it ideal for asset benchmarking purposes.

GFMS Mine Economics is undertaking a program of global mine visits in order to gather the technical and operating data included in the new study. Besides an in-depth production cost breakdown, revenues, margins and forward-looking cash flows are presented for each operation.