KALAHARI DESERT, Botswana—Crouching in the sun-scorched sand, De Beers geologist Charles Skinner picked up an ashy, white cylinder of rock and looked for shimmering evidence that an ancient volcano was sitting below his feet, containing billions of dollars’ worth of diamonds.
Mr. Skinner is at the vanguard of a new effort by diamond merchant De Beers to uncover the first major diamond mine in at least 20 years. De Beers last year launched an early-stage exploration push, focusing on the desert of southwest Botswana.
De Beers’ undertaking highlights the dilemma faced by diamond miners, who are forecasting diminishing supplies if they don’t discover new caches of gems. Only a blockbuster discovery will enable them to keep long-term production at current levels, according to De Beers and analysts.
The problem: Only a fraction of the world’s underground diamond deposits are large enough to justify the expense of harvesting them.
Mr. Skinner is spearheading the push by De Beers, a unit of Anglo American PLC, combining old-school drilling techniques with sophisticated big data and artificial intelligence technology in the quest to strike it lucky.
“On the odds side, the deck is stacked against you,” Mr. Skinner said. But “exploration depends more on perseverance than on luck.”
Other diamond miners, such as Alrosa Group, the world’s second-largest producer of diamonds by value behind De Beers, are ramping up exploration efforts as production plateaus. Alrosa, whose core operations are in Russia, says its diamond reserves are sufficient to sustain stable production for 17 years. In Botswana, it is exploring four areas for diamond deposits. “We continue to replenish depleted reserves and search for new deposits,” an Alrosa spokeswoman said in an email.
Global diamond production is expected to peak in 2017, when 164 million carats of diamonds are forecast to be produced, according to McKinsey & Co. After that, production is expected to go into a long-term decline, unless major new discoveries are made, McKinsey’s forecasts show.
“If you look on a long-term basis, the deposits are not being found,” said Phil Swinfen, mining analyst at brokerage firm Numis Securities. “The rock that hosts diamonds is very rare.”
Diamond miners have been struggling this year after a strong performance in 2014. Softening global demand for jewelry and other luxury goods has weighed on prices for rough diamonds, which haven’t been cut and polished. A September sale of rough diamonds by De Beers met with poor demand, and prices could fall even further, analysts said. Detailed results from the sales aren’t made public.
De Beers, which mines rough diamonds and sells on to firms that ready them for the market, has slashed production this year as sales ebb. Thursday, De Beers said third-quarter diamond-sales volume fell 59% from the previous year and production slid 27% to six million carats.
A discovery of a major new source of diamonds won’t solve De Beers’ near-term woes, or those of its struggling parent company, Anglo American. But it is crucial to the company’s long-term future. One of the industry’s last large-scale diamond discoveries was Gahcho Kué in Canada, which is being jointly developed by De Beers and Mountain Province Diamonds Inc. Discovered in 1995 and due to enter production next year, Gahcho Kué could produce about 4.5 million carats a year over 11 years, based on its reserve base of 55.5 million carats.
That isn’t enough to stop the bleeding. De Beers’ current crop of diamond mines—including the world’s most valuable mine, Jwaneng, in Botswana—is running thin. While they will continue to churn out diamonds for decades, production at many of these mines has already peaked.
De Beers is marshaling new technology, including advanced computer algorithms that can comb through the mass of data the company gathers as it scans the Kalahari for signs of a diamond-studded kimberlite, a pipe of solidified lava containing rich veins of diamonds pushed up from the earth’s mantle. Only about one in 100 kimberlite pipes contains even one diamond, and only a fraction of those have enough to make them worth building a mine to harvest the diamonds, Mr. Skinner says.
Mr. Skinner, a nearly 30-year veteran of De Beers, also focused on sites in Canada, Angola and South Africa. But in the past year he narrowed his search to the Kalahari, which he says has good prospects without some of the political uncertainties of countries such as Angola, which earlier this year suspended the issuance of new mining licenses, including some De Beers had submitted.
The area in focus, about 20 miles north of the tiny village of Tsabong, near the border with South Africa, was most recently prospected for diamonds in the 1970s, Mr. Skinner says. But the miners weren’t able to peer much more than 300 feet below the earth’s surface and abandoned the hunt. Mr. Skinner believes that evidence of a trove of diamonds could be found much deeper—more than 1,000 feet down.
Earlier this year, De Beers deployed several drill rigs to start boring into the thick crust that lies below the shifting sands of the Kalahari. By July, they had reach about 1,000 feet, when Mr. Skinner and a small team of De Beers geologists visited the site to inspect the operation.
Beyond the nuts and bolts of drilling, the exploration effort also employs high-tech detection methods such as a “Squid”—superconductive quantum interference device—which can measure shifts in the magnetic field that indicate the presence of a kimberlite.
While the devices have been in use for years, Mr. Skinner says De Beers is using new computer techniques in tandem with Squid, including artificial-intelligence software, in the hunt for previously undetected signs of a diamond bonanza. De Beers’ systems, using data acquired in 50 years of exploration and mining operations, search for signals in mineral samples that can help predict whether a trove of diamonds might be found in a specific area.
The evidence so far is inconclusive, Mr. Skinner says. Even if he finds convincing evidence, he would need to persuade De Beers’ board that the effort is worth sinking millions into.
The geologist likens early-stage exploration to a crime-scene investigation.
“You collect fingerprints, DNA, blood, and out of that you come up with a suspect,” he says. “What comes up next is the courtroom where you go before the judge and present the evidence.”
If the evidence isn’t strong enough, the team will have to move its search elsewhere. “You can’t find what you want in this business, you can only find what’s there,” he said. “The key is knowing when to walk away.”
Write to Scott Patterson at firstname.lastname@example.org
Share this entry
We hope you enjoyed reading this Article, please feel free to SHARE and COMMENT
- Ellen DeGeneres to accept People’s Choice humanitarian awardJanuary 4, 2016 - 3:52 pm
- Adele’s ‘Hello’ has biggest sales week in over 15 yearsNovember 5, 2015 - 10:00 pm
- ‘Limitless’ scores full season order from CBSOctober 24, 2015 - 9:00 pm
- Vin Diesel’s ‘Last Witch Hunter’ Gets Burned by Critics: 9 Reviews Cursing Action Hero’s Latest AdventureOctober 23, 2015 - 9:00 pm