The value chain of diamonds is also called the "Diamond Pipeline." (World Diamond Council, 2007) In global scale, the diamond industry's value chain consists of the following segments: exploration, mining, sorting, polishing, diamond marketing, jewelry manufacturing, and lastly, retailing. These entire processes vary in time according to the sizes of the diamonds. Normally, the chain of its process covers 18 to 30 months.
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Larger stones such as those above .5 carats move faster through this value chain. As mentioned above, the formation of diamonds is very rare. With the long period of time needed for it to be formed, this value chain is very crucial to the global supply of diamonds throughout the world.
The exploration, excavation, and mining process constitute sophisticated segments in the diamond supply chain. In order to make exploration and mining more manageable, experts continue to develop new mining technology. (Rudnicka, 2010) Also, the procurement of raw materials or the rough diamonds constitutes a significant segment in the value chain. To be able to instantly transform rough diamonds into diamond jewelry for retail sales depends on the rate of retrieving these gems from the ground. The success of the end product depends on the successful procurement of rough diamonds.
The following gives a succinct description of each of the process in the global diamond value chain:
Exploration is the first segment of the diamond global value chain. It consists of looking for all possible sources of diamonds as three main forms of deposits: kimberlites, lamproites and placer deposits. Diamonds are often found mixed with magma and mineral rocks that are shaped like cones. When they reach the earth's surface, they are often called kimberlites. (Rudnicka, et. al., 2010). Kimberlite pipes generally occur as a cluster and they are the large sources of diamonds. These can be easily found under lakes which are formed by inactive volcanoes.
It is estimated that only one kimberly pipe out of two hundred will produce quality diamonds. Commonly, diamond exploration often refers to the exploration of Kimberlite. The Kimberlite exploration is risky yet it is very profitable, when diamonds are actually found. The discovery of mineral deposits usually leads to revenue growth for the diamond company and for the host country. Geologists know the areas where diamonds can be most likely found after their long study and testing in the suspected areas.
One of the best reference for exploring Kimberlite exploration is a good comprehension of kimberlite, the tectonic management on its evolution, emplacement and preservation. (Khatediya & Verma, n.d.) The basic requirement for the existence of a diamondiferous Kimberlite is a consistently low geothermal gradient with small thermal erosion. The formation and showing up of kimberlite is played by chance but it is said that lithospheric extension triggers its magma formation. Exploration is accomplished through selection of target, follow through and reconnaissance, drilling and assessment. (Handbook on Kimberlite Exploration and Mining, n.d.)
While each phase of the exploration must be followed, at times, this is short circuited in order to arrive at a quick decision. Geologists apply two major methods in prospecting for kimberlites. These are 1. Heavy mineral sampling minerals such as pyrope garnet, chromite and clinopyroxenes and 2. Geophysical techniques. Using any of these two methods, the prospect area is confirmed by reconnaissance and follow up. It ends in the final decision to drill the target.
A new method is called the Airborne Multi-Spectral Scanner (AMSS), which detects weathered kimberlites through microscopic electromagnetic wavelength absorption due to the clay minerals rich in calcium. These are created by the weathering of kimberlites. After a kimberlite is determined, then there is follow up work and the identification of the parameters such as grade, size, value. Then, an estimated mining cost is planned.
The crucial strategy is to target and identify areas where there are diamondiferous kimberlites than just mere kimberlites. Other important strategies include the application of the proper technology to the targeted project and quickly deciding on the exploration as early on. As mentioned earlier, the process involved in exploration is mainly a matter of risk management and sound judgment. An exploration model is then built after target selection. This combines all the necessary information from previous resources such as maps, technical documents, etc. Then, heavy mineral sampling is conducted. It consists of identifying heavy minerals or those with specific gravity and those that often exists as oxides.
In kimberlite exploration, the mineral indicators include mantle-obtained xenocrysts of pyrope garnet, picro-ilmenite, chromite, chrome diopside, and rough diamonds. Olivine is also determined in places where the climate is cold. The indications of these minerals point to the presence of the primary source kimberlites in the vicinity. Sampling intervals may vary according to the target place's topography and geology.
Diamonds are the fifth important metals in terms of average annual value. They are worth 10 billion pa. (Mining 101, 2012) There are almost 160 Mct of "rough" or uncut diamonds mined annually. These diamonds are valued twice when cut. They value seven times as much when retailed in jewelry shops. Diamonds are estimated to be worth almost US$70 billion yearly.
Mining production has increased over the last thirty-five years. Discoveries abound in thirty-five countries as well. (Rudnicka, 2010) Africa and Canada are the major mining sites. (Mining 101, 2012) The competitive advantage of mining companies lies in their utilization of the best mining techniques suited to the environment. However, there are various risks involved in these endeavors. (Rudnicka, 2010) Most metals need comprehensive processing prior to its profitable trading. This requires huge capital investments, infrastructures and expertise.
As such, only the major diamonds companies are involved in this value chain process. If smaller companies discover base metals, they often sell their opportunities to a larger company or they sell the minerals at a crude or concentrated stage. (Mining 101, 2012) In the case of diamonds, however, they are simpler to mine and transport. They are easily traded. Hence, the diamond mining industry attracts a better number of smaller mining companies and capital infusion activities.
After exploration, diamonds are excavated to the Earth's surface through five main types of mining:
Withdrawing of diamonds rely on several methods according to the following:
Artisanal diamond mining is the fundamental type of mining. It involves digging and sifting through mud or gravel deposits on the banks of the river. There is no technology involved in this type and only little equipment is needed. However, this type requires hard labor and long hours of digging and sifting.
"Diamond diggers" as they are commonly called, the miners for this type work with their own hands, sieves and shovels. (Diamonds: Gem & Diamond Mining Technology, 2012) This type of mining is common in poor nations as it has no related costs in terms of equipment. For instance, it is used in Angola, the Congo, Liberia, and West Africa. (Rudnicka, 2010)
The second type of diamond mining is the hard rock mining. This is a technique in which miners build underground tunnel and rooms held up by timber pillars or standing rock. The rooms are accessed by a shaft and a decline. This type of mining requires a specialized equipment compared with the first type.
The third type is called the marine mining. This is relatively new and has been used since the 1990s. This type employs both vertical and horizontal techniques to dig diamonds from offshore placer deposits. Vertical marine miners utilize a 6 to 7-meter diameter drill head to reach through the seabed and suck up the diamond bearing contents from the base of the sea. Horizontal miners, on the other hand, employ Seabed Crawlers or the remotely controlled, CAT-tracked sea mining vehicles. (Rudnicka, 2010)
They navigate the vehicle across the sea floor in order to pump the gravel up to an offshore vessel. This type requires a more sophisticated equipment than the first two types. The open pit mining consists of extracting rock from the ground through an open hole or pit. This type of mining is used when mineral deposits are found along the earth's surface or along kimberlite pipes.
It is also advisable to use when the surface material covering the deposits is comparatively thin and/or when the minerals are contained in geographically unstable underground, which is not safe for tunneling. Open pit mines are characterized by pit lakes or the waters forming at the open pit's center. This is due to the groundwater intrusion. Open pit mining is safer than hard rock and marine mining. The final type of mining is called placer mining wherein minerals are extracted from the earth's surface. It does not employ tunnels. Placer mining only needs used water pressure, a special surface excavating equipment or plain hand digging to excavate the rough diamonds.
After the mining process, the raw minerals or the rough diamonds are sold to wholesalers. This sorting process constitutes a vital phase in the creation of a retail diamond jewelry. The diamond wholesalers like Tiffany & Company choose diamonds based on the market demand and on the four sorting categories (such as size, shape, color, and carat). Good selection process means good, quality diamond jewelry pieces in the latter part of the global diamond value chain. These large retailers sort the rough diamonds based on an estimated 16,000 individual categories of shape, color, size, and carat. (Koonar, 2006) The best diamonds are delivered with a Kimberley Process certificate to the next stage. This certification attests to the diamonds' smooth source. All the remaining rough diamonds are then used for industrial purposes.
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Diamond shapes include emerald, heart, marquise, oval, pear, princess, and round. (De Beers Jewellery Website, 2012) Its colors include white, faint yellow or brown. It may also be colored red, blue, bright yellor or green. (The GIA Color Grade has been detailed above.) Rare diamonds are colored black, blue, light green, pink, violet, and red.
The world famous blue diamond is called the Hope Diamond, a 45.5 carat gem. It was mined in Colorado and is now displayed at the National Museum of Natural History, Washington, D.C. (Rudnicka, 2010) Diamonds are also sorted according to its carats or its weight. Since 1913, the international standard for one carat of diamond is 200 milligrams or 1/5 of a gram. Jewelers now often refer to carats in 1/4 increment. In jewelry, the carat is described in terms of the total carat weight with regards to pieces with more than one diamond. As mentioned earlier, the larger the carats, the higher in value.
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