VIKRAM MERCHANT, Rio Tinto’s Country Head of India, in an email interview speaks about the long-standing Indo-Argyle partnership and Rio Tinto’s future plans for diamond mining.
How would you define the long-standing, three-decade-old partnership between Argyle and India?
Strategic and extraordinary! In 1989, Argyle opened its India Representative Office in Mumbai, home to the majority of our customers purchasing rough diamonds through our Antwerp office. Over the ensuing 30 years, India has played an extremely important role in the success of the Argyle diamond mine. As well as providing a customer base, India was an emerging diamond and jewellery manufacturing hub, and ultimately a major source of competitive advantage for Argyle.
How is Argyle’s closure likely to affect your Indian partners, who processed the majority of its output?
For quite some time now, we have been working closely with all our Argyle Select Diamantaires to manage the transition to Argyle’s closure. As a result our Indian partners have plans in place to operate in a diamond world without the Argyle production, including switching to other productions and right-sizing their infrastructure.
Is Argyle’s closure likely to push up diamond prices? Anything quantifiable in percentage terms?
The answer here lies in overall supply/demand dynamics and the nature of market fundamentals, against the context of a global pandemic. I wish I had a crystal ball!
In the last 4-5 years, what was the volume of diamonds that Argyle supplied to India on average? Any thoughts on how this shortfall is likely to be addressed by Indian companies?
In the last 15 years, the majority (90%+) of Argyle’s annual production has been supplied to India. It is very difficult to replace Argyle volumes, given it has been such a unique production with a wide range of colours and high volume of smalls. Some companies will switch over to other product segments, some have been testing lab-grown manufacturing segments and others will be rightsizing their infrastructure.
Tell us more about the path-breaking work done by the Indo Argyle Diamond Council.
The relationship between Argyle and the Indian diamond in industry led to a formidable competitive advantage. We undertook our initial cutting and polishing tests in India and together with our Indian partners built innovative marketing programs for our champagne diamonds.
The Indo Argyle Diamond Council was one of the formative marketing initiatives, launched in 1993, whereby Argyle worked with the Indian diamond industry to create awareness and acceptance of Indian made jewellery in the US, paving the way for direct sales to US retailers.
Argyle won the award for Australian Exporter of the Year in 1994, for the establishment of the IADC. The judges noted the awareness in the American jewellery trade of champagne diamond jewellery had increased from 6% to 95% in a short time.
How significant was the Indo-Argyle partnership in terms of its contribution to the success of the Indian diamond industry?
It is an interesting exercise to ask whether the Indian diamond industry could have expanded so rapidly without the influx of Argyle diamonds. Whatever the answer, the result is a win-win for Argyle and the Indian diamond industry.
For the Indian diamond industry, what started out as a fragmented cottage industry using rudimentary tools in the 1940s, has embraced new technology and demonstrated considerable innovation and boldness. Today, 14 out of 15 diamonds are cut and polished in India.
For Argyle, the Indian partnership was the main vehicle for understanding the profitability of the Argyle production in an era where diamantaires were used to dealing primarily with large, colourless diamonds. The unerring faith and support of the Indian diamond industry was also critical to Argyle deciding to tread unchartered waters in 1996 and independently market its predominantly small coloured diamond production.
We are proud of the Indo-Argyle partnership and the contribution it has made to the diamond industry and to the Indian economy.
With Argyle gone, will Rio Tinto Diamonds shrink its India presence?
Argyle is closing but Rio Tinto’s diamond business is not. India continues to be our most important market for diamonds and the Indian manufacturing industry is key in the distribution of our Canadian (Diavik) rough diamond production and any additional Rio Tinto diamonds production in the future.
Rio Tinto has a growing footprint in India with 340 employees. Other than our commercial teams, our business services operation in Gurugram, Haryana, supports our technical, engineering, finance, HR and administration functions globally.
Murowa, Bunder and now Argyle… Rio Tinto’s diamond portfolio seems to be shrinking by the day…. will the mining giant continue to stay interested in the diamond business now that its flagship Argyle mine has closed down?
We will continue to produce high quality, predominantly white diamonds from our Diavik mine, as well as invest in diamond exploration.
Fancy colour diamonds keep breaking auction records even in difficult times like these. Are we likely to see higher numbers with Argyle’s pink output gone? Any thoughts on the final two Pink Tenders?
Rarity, uniqueness and a finite supply has driven the strong value appreciation we have seen, and continue to see, in Argyle pink diamonds. By way of example, since 2000 the prices of our Argyle Pink Tender diamonds have increased by more than 500%.
What are Rio Tinto’s plans for its diamond portfolio? Are there any new projects, acquisitions, etc. in the offing?
Rio Tinto remains active in diamond exploration with a focus on Canada where we believe there is most prospectivity.