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turbocharger1

buying 20000-30000 carats of diamond a month

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Dear all:

 

I am new to gei. this is my first posting. I see you talk a lot about mining. I ran across soemone last year who was planning to buy several thousand carats of diamonds per month. how would he do that? and why would he do that?

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Hi Turbo,

Welcome to GEI !

 

As it happens, I am a shareholder in a company that mines diamonds, and speak with management fairly regularly.

 

"Several thousands of carats" per month is alot of diamonds.

And the cost will depend upon what type of diamonds they are buying. This could cost a modest amount, if they are low quality, industrial diamonds (maybe $20 per carat, or less), and quite alot (even up to $1,000 per carat or more) for larger good quality rough diamonds.

 

The "run of mine" for the company I know is something like $125-150 per carat, and for this mine- which is an alluvial in South Africa- the average size stone is 0.20-0.25 per stone.

 

Another mine that I know of is producing rough diamonds averaging about $300 per carat, and their average stone size is larger.

 

There are not many companies in the world that produce more than say $5 million worth of diamonds per month.

 

The "Big Three" are: DeBeers, Rio Tinto, and BHP, and any of these would have an easy time meeting your requirement. Beyond that, I would guess that there are less than 10 companies in the world that mine more than $5 million worth of diamonds per month.

 

If you can tell me more, perhaps I can do a bit of checking. I will be off to a mining conference (Indaba) in Capetown next week, and can ask a few questions there.

 

MORE on the Indaba ... coming ...

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I have a friend that told me that it is best that he doesn't buy it from wholesaler, but buy it from an auction in south africa directly. Can you please comment on the process. How would he go about doing that?

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my diamond mining friends sell their diamond production at regular auctions.

they invite a different half dozen buyers each time, to minimize collusion.

 

i dont think an "investment buyer" could easily get an invitation to these auctions,

but they may be able to organise some buying through a diamantier (that is,

a professional diamond merchant). are they speaking with such persons?

 

another way to get "diamond exposure" is to buy shares in a diamond miner.

have they considered this?

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