GIA PRESENTATION 2011

Presented by Steve McClelland for GIA MUMBAI, 2011
Director/Sales Manager Inspira Diamonds Pty Ltd

Steve MClelland, Inspira Diamonds, for GIA, 2011 1

outline 2011
1. This presentation is a brief glimpse
behind the apparently glamorous world
of diamonds:
2. to highlight what is meant by
“diamond pipeline” and diamond chain,
3. to outline who are the typical industry
participants, with insight into what
happens before the jeweller and
consumer level
4. To understand the value addition within
the diamond chain
5. To appreciate with new respect how
diamonds reach us from the earth,
6. and gain an understanding of the http://www.google.co.uk/images?hl=en-GB&rlz=1T4DAAU_en-
human involvement in the process of GBAU273AU275&q=argyle+mine+images&um=1&ie=UTF-
8&source=univ&ei=rP_YTP-
diamond value JHIfovQPxpbmkCg&sa=X&oi=image_result_group&ct=title&resnum=1&ved=
0CCgQsAQwAA


the diamond jewellery value chain
In US$ billion

GLOBAL GLOBAL
ROUGH PRODUCTION
production, The of finished Jewellery ,
diamond
2010 value chain 2010
$6.89 $60.17

Source of data
:http://www.idexonline.com/portal_FullNews.asp?TextSear
ch=&KeyMatch=1&id=35340,
25/07/2011

the diamond pipeline:2010
year of recycling

Source: IDEX Source:http://www.idexonline.com/portal_
FullNews.asp?TextSearch=&KeyMatch=1&id=35340,
25/07/2011


the diamond pipeline: 2009
the worst year since WW2

Source: of data
http://www.idexonline.com/pdf_files/2009-
diamond_Pipeline_Poster.pdf, 10/11/2010
IDEX 2009 diamond pipeline

the diamond pipeline:2006

Source: of data IDEX 2006 diamond pipeline
http://www.idexonline.com/pdf_files/IDEX_Online-
Pipeline_Poster_2006.pdf, 01/11/2010


Diamond Pipeline: from original
value

100 115 127 133 166 320
% % % % % %

mine sorting polished Jewellery
polishing retail
dealing manufacturing

Source: of data
http://www.duke.edu/web/soc142/team7/Diamond%20Gl
obal%20Value%20Chain.htm

exploration and mining
many hands

global diamond mining

Source- http://www.info-diamond.com/rough/world-production.html


Global production values 2010
Rough Production Value in
US$billion

Australia
Angola
DRC
Namibia
Botswana
South Africa

Source of data:
http://www.idexonline.com/portal_FullNews.asp?TextSearch=&KeyM
atch=1&id=35340,


Example at Argyle (RTD): open cut
mining
Currently in transition to
underground

http://www.google.co.uk/images?hl=en-GB&rlz=1T4DAAU_en-GBAU273AU275&q=argyle+mine+images&um=1&ie=UTF-8&source=univ&ei=rP_YTP-
JHIfovQPxpbmkCg&sa=X&oi=image_result_group&ct=title&resnum=1&ved=0CCgQsAQwAA


formation of diamond

Geological model of pressure
and temperature needed for
diamond material

Argyle fact: product formed at
lower depth and higher pressure
than usual diamond material

Source: John Mann, Sorting & Valuation Projects, Federal Police training presentation, 2003

at the mine…..diamond recovery process
Blasting

Crushing of ore

Scrubbing

Heavy media
separator

Xray separator

at the mine…..diamond concentrate
During this part of the process the
Caustic recovery
diamond product and non-
diamond product are separated
and treated with responsible ACID
practices.
PH neutralise ore
The diamond concentrate is
separated by size and the pinks are
separated for processing in Responsible return
Australia. of ore


mine extraction
The process of extraction and
separation of the ore from its
Kimberlite host, forms the
production or output level of the
mine, which is measured in carats
per tonne of ore.

250 tonnes of ore must be
mined and processed to
produce 1 carat, depending on
the mine
(Cited by Wall St Journal)

http://www.slideshare.net/Platipus/diamond-
ethical-supply-chain-deconstruction-2010

examples of rough diamond shapes


rough diamond models

makeable sawable

maccle

rough sorting and rough trading
many hands

rough sorting…

Apart from extraction of the
diamond from the ore body,
the first real value add of
diamond product begins at
the sorting level.


sorting…sorting and more sorting

Diamonds are sorted and
graded on colour, size, and
carat weight by machine, and
hand sorting (dependent on
size and value)
With final sorting done by a
highly experienced team of
diamond graders.
Notice how the diamonds are
labelled and separated, which is
the beginnings of mine chain of
custody.


Rough sorting examples…..


transparency to government and
public……
Example KP certificate
 After recovery rough guaranteeing conflict free origins ,
diamonds are sent from the required for export/import rough
minesite to office RTD in diamonds
Antwerp.
 An estimate of value has
been placed on the exported
goods by an appointed RTD
Royalty valuer and
Government representatives,
based on historical outputs
 The goods are then approved
for export, along with its KP
certificate (non-conflict
guarantee).


and yet more rough sorting …….


rough sales preparation and
presentation…
•Diamonds are also sorted into
meaningful assortments for
presentation to the customers of
RTD.
•The Sales team presents the goods
at monthly interval sales, also called
“sights”.
•Prices are based on the
extrapolation of what the polished
price might achieve in the
marketplace
•Customers purchase their allocated
goods, very often in millions of
carats, or dollars, by mere
handshake.
•Most production will leave Antwerp
for manufacture overseas.

polished manufacturing
many hands

Most of world’s polishing takes place in
India :

an estimated 1 million people are
employed by diamond industry in India

http://www.diamondfacts.org/


value add…
The diamond is forever altered into
its final polished state, via a plan
usually by a form of SARIN,
combined with years of polishing
experience within the polishing
team, and its supervisor.

The team try to maximise yield
(commercial) whilst keeping in
mind proportions/symmetry/cut
(brilliance).


polishing process
•Sawing – the process of dividing a stone into two pieces
using either a blade or a laser.

•Cleaving – a process where the rough stone is split into
two pieces to improve the shape or the quality.

•Bruting – a process which shape the stone in to the
desired shape.

•Polishing – the process of applying facets to the surface
of the stone.


marking & cleaving
by traditional methods


Diamond has a grain structure. It can be sawn against
the grain and cleaved with the grain.

Sawing Grain

Cleaving Grain


Sawing for a Major and Minor stone


70% -30%

50% - 50%


Examples of
commercial decisions


Bruting


Polishing


safety in the polished manufacturing
process…

A combination of old traditional
hand method, or laser technology
is applied. Lasers assist in better
diamond yield, and brilliance, and
very importantly are healthier for
the worker.
Factories are now more efficient,
cleaner, with better lighting and
product output due to BEM and
best business practice
requirements driven by mining
companies like RTD and BHP.


recent trends in value addition….

Trends to manufacturing to ideal proportions
(known as triple EX), or hearts and arrows,
is an attempt by the industry to extract more
value from the diamond product, whilst also
satisfying consumer demand, since the ideal
proportions are highly sought after and
command higher prices.


polished trading
many hands

diamond trade:

 Diamonds are traded at 28 registered diamond
bourses worldwide
 Antwerp being the major recognised world diamond
center
 The move to standardisation with Rappaport lists, and
certification makes diamond trade more transparent
 At this stage most diamonds above 30-50pts will be
sent to a lab for certification, where the 4c’s will be
applied, the stone will be plotted and graded


international trade participants

wholesalers

jewellery
jewellers retailers brokers/dealers
manufacturers

consumer

Pawn brokers resale

goods being sized and prepared for sale
at a wholesaler


other value addition
many hands

certification…more value add
•In recent times (last 10 years)
certification has become an important
tool, protecting the supplier and the
consumer, and providing consumer
confidence through consistent grading
standards.
•It also impacts significantly on the
value addition of a diamond product.
•A GIA graded stone, can command
more than a lesser lab for example
•And a stone that is uncertified is
commercially less than a stone that is
certified


even shipping and customs adds
value…


branding , packaging and marketing
adds further perceived value..


Jewellery manufacture
Many hands

jewellery design and manufacturing

Probably the greatest impact on value
addition….

finished jewellery product

IDEX estimated a mere 27%
of the value of a finished
piece of jewellery is attributed
to diamond product, the rest
being manufacture, design,
gold and marketing

diamond_Pipeline_Poster.pdf

“Land I love”: Rohan Jewellery, 2009,
inspired by Australian diamonds

conclusion & the future….
Many hands

contraction of supply......
•2011 world production to plateau to 48 m carats

•No new diamond deposits

•De Beers warn contracted supply
will force prices up next 15 years

•Rio tinto warns rough-diamond prices will increase
In the next decade as production will
fail to meet demand from emerging BRIC economies
(Brazil, Russia, India and China)
http://www.businessweek.com/news/2010-10-06/rio-says-rough-
Steve MClelland, Inspira Diamonds, for GIA, 2011
diamond-prices-to-extend-gains-as-supplies-fall.html
53

consumption changes…

 Consumption growth: India and China
 Share of US market continues to decline, but
still high in diamond content of jewellery
 Emergence of “investment” diamonds
 Reserves of mine production becoming
depleted

http://www.idexonline.com/portal_FullNews.asp?
TextSearch=&KeyMatch=1&id=35340,
25/07/2011


recycling as the “new mine”….

 “2010:market value of global diamond
recycling estimated at $6 billion “
 Recycling tipped as the :”new mine”
 Secondary market picks up : bought at most
80% off Rappaport , recycled and re-sold.
 Increasing price of gold

TextSearch=&KeyMatch=1&id=35340,
25/07/2011


This presentation has shown a brief glimpse
into the many hands involved in the global
diamond process.

As consumers and business leaders
we must be aware of the cost to
bring this “glamorous” product to
the market. And endeavour to lead
the world in ethical and respectful
practices.


Credits and thanks

Credits
 Written by Charmaine Thane, Inspira
Diamonds with John Mann, Macro
Diamond photography
 for Steve McClelland, Inspira Diamonds
at GIA AUG, 2011.


http://www.google.com.au/imgres?imgurl
=http://www.satimagingcorp.com/galleryim
ages/argyle_view_diamond_mine_3d-
wide.jpg&imgrefurl=http://31/10/2010
Mann, John, Sorting & Valuation Projects,
Federal Police training presentation, 2003
http://www.cibjo.org/index.php?option=com
_content&view=article&id=235&Itemid=45,
Oct-Nov, 2010

http://www.idexonline.com/pdf_files/IDEX_O
nline-Pipeline_Poster_2006.pdf, 01/11/2010
http://www.businessweek.com/news/2010-
10-06/rio-says-rough-diamond-prices-to-
extend-gains-as-supplies-fall.html, 01/11/2010

http://www.cibjo.org/index.php?option=com
_content&view=article&id=268:luxury-
companies-must-satisfy-consumers-deeper-
social-conscience-states-report-released-at-
cibjos-csr-session-at-shanghai-
expo&catid=4:news&Itemid=19, Oct-Nov,
2010 Steve MClelland, Inspira Diamonds, for GIA, 2011 61

http://www.google.co.uk/search?sourceid=n
avclient&aq=0h&oq=kimberley+pr&hl=en-
GB&ie=UTF-8&rlz=1T4DAAU_en-
GBAU273AU275&q=kimberley+process+certifi
cate, 01/11/2010

http://www.diamondfacts.org/images/facts/
quote_lines8_fact06.jpg, 01/11/2010

http://www.diamonds.net/news/NewsItem.a
spx?ArticleID=32505, 01/11/2010

http://www.worlddiamondcouncil.com/, 01/11/2010
http://www.slideshare.net/Platipus/diamond
-ethical-supply-chain-deconstruction-2010,
01/11/2010
http://www.duke.edu/web/soc142/team7/Di
amond%20Global%20Value%20Chain.htm,
01/11/2010


http://www.google.co.uk/images?hl=en-
GB&rlz=1T4DAAU_en-
GBAU273AU275&q=argyle+mine+images&um
=1&ie=UTF-8&source=univ&ei=rP_YTP-
JHIfovQPxpbmkCg&sa=X&oi=image_result_g
roup&ct=title&resnum=1&ved=0CCgQsAQwA
, 01/11/2010
http://www.info-
diamond.com/rough/world-production.html,
01/11/2010
diamond_Pipeline_Poster.pdf, 10/11/2010
http://www.investmentinternational.com/ne
ws/alternative-investments/diamond-prices-
set-to-rise-after-mining-giant-de-beers-
announces-cut-in-production-to-preserve-
stocks-3524.html, 10/11/2010


Sanghvi and Virani, July, 2010: Is Social marketing effective
in the diamond industry? Dissertation CASS Business School,
City University London

TextSearch=&KeyMatch=1&id=35340, 25/07/2011

http://www.diamondworld.net/contentview.aspx?item=6109, 26, Jul, 2011

http://www.diamondintelligence.com/magazine/default.aspx?SubCatId=64,
26 Jul, 2011


copyright issues

 ©Copyright of author : Charmaine Thane, 2011.

 Where no photo source is cited the Photos appear
courtesy of John Mann, Macro Diamond
Photography

 This presentation has been provided for the use of
the GIA, and other non-profit educational
institutions, for the purpose of instruction and
education, provided that the copyright of the author,
all cited articles and all images are observed.

GIA PRESENTATION 2011

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