Rio finds Australia’s biggest pink diamond

Vancouver – Rio Tinto (RIO-L, RIO-A) has discovered the biggest pink rough diamond yet found in Australia.

The 12.76 carat diamond came from the company’s 27-year-old Argyle mine in the East Kimberley region of Western Australia, the source of 90% of the world’s pink diamonds. The company actually found the stone some two months ago, but it waited until it started cutting the stone to announce the find.

The company has entrusted Richard How Kim Kam, who has worked at Argyle for 25 years, to cut the stone.

Rio stated that the diamond is a light pink, similar to the 23.6-carat Williamson Pink diamond given to Queen Elizabeth as a wedding gift that was later set into a brooch for her coronation.

Australian media reported that the diamond is expected to sell for as much as $10 million, with past diamonds in Rio’s special collections regularly selling for $1 million a carat.

The Argyle open pit mine produces diamonds from lamproite pipes, though the main AK1 pit was mistakenly named the Argyle Kimberlite 1 by geologists after misidentifying the host rock. The open pit spans 2 km by 1 km and went into production in 1985.

The company started development work on an underground portion of the mine in 2003, driving a 2.5 km exploratory decline that intersects the lamproite ore body 85 metres below the ultimate floor of the AK1 open pit.  In 2005 Rio’s board gave the go-ahead for further development, but in January 2009 the company decided to slow development in the face of global market conditions and a weakening diamond market.

In September 2010, however, the company committed US$803 million to go ahead with the underground block cave project. Rio expects to have the underground portion operational in 2013, expending the mine life until at least 2019. The company is targeting a production rate of 9 million tonnes a year by the end of 2012.

As of late 2010 the mine had produced more than 760 million carats since opening. Along with pink diamonds the mine is a significant source of champagne, cognac and white diamonds.

In November 2010 Sotheby’s sold a 24.78-carat pink diamond for $46 million, establishing a record for the most expensive jewel sold at auction. Previously the record was $24 million for the 35.56-carat Wittelsbach deep-blue Diamond sold by Christie’s in 2008. Rio noted that Christie’s has only auctioned 18 polished pink diamonds over 10 carats in its 244-year history.