Diamonds as an Investment

Pink diamonds: why Chinese collectors have their eyes on these ‘flukes of nature’

Mining giant Rio Tinto is inviting sealed tenders from dealers and collectors for 63 pieces of Gemological Institute of America-graded rare diamonds with a combined weight of 51.48 carats by October 10

PUBLISHED : Thursday, 13 September, 2018, 7:16am
UPDATED : Thursday, 13 September, 2018, 11:12am

One of the last annual tenders of coloured diamonds by Rio Tinto is expected to draw keen interest from Chinese collectors and dealers as the company is closing the world’s largest mine for these “flukes of nature” in 2020.

On display at a five-star hotel in Hong Kong until next week are 63 pieces of Gemological Institute of America-graded diamonds with a combined weight of 51.48 carats.

Only 100 customers – primarily collectors and rare gem dealers – have been invited to two-hour private viewings, and place sealed bids by October 10 in the 34th Argyle pink diamonds tender.

A preview was arranged by the Anglo-Australian company in Sydney earlier in July, and more will be held in New York later.

“Because of their love of red diamonds, which are the most valuable, it would not surprise me if we had a strong representation from [mainland] China and Hong Kong,” Josephine Johnson, Rio Tinto Diamonds’ global marketing director told the South China Morning Post in an exclusive interview. “There are only a few hundred red diamonds in existence in the whole world.”

She declined to put an estimate on how much the tender could fetch, saying the highly collectible gems, similar to art work, are hard to value as they are unique.

The record per carat price for a pink diamond is US$2.2 million, which was set in 2010 for a 5-carat gem, while a 2.09-carat red diamond fetched an all-time high of US$2.4 million in 2014, both of which were sold in Hong Kong.

Asia, particularly Hong Kong and China, accounts for roughly half of Rio Tinto’s diamond sales, Johnson said.

Discovered 39 years ago, the Argyle diamond mine in Australia supplies over 90 per cent of pink diamonds sold globally, but Rio announced in March this year that it will be closed in 2020, as it will be unable to sustain profitable production.

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“Why we have got such intense colours is a subject that universities are still studying, but what we believe is that somewhere along the process of that volcanic pipe forming, there was an additional type of shock – more intense heat and pressure than on any other diamonds,” Johnson said.

In contrast, South Africa’s famous blue diamond derives its colour from the trace element boron.

“I consider red and pink diamonds a bit like the Fabergé eggs, the enamel [jewelled] eggs produced [only] during the Russian Revolution,” said Danish dealer Ulrik Hartmann, who was invited to the private viewing. “Similarly, no more of these coloured diamonds will come out of the mine in three years’ time, so we expect to see more interest in the last phase [of the offerings].”

According to an index compiled by Rio, Argyle pink diamond prices have risen by an average 8.7 per cent in the 15 years to mid-June 2015, compared to an 8.1 per cent gain of the AMR Art Top 100 index which tracks prices of work by top artists at auctions.

The corresponding gain of the MSCI World Index, which tracks over 1,600 stocks in 23 developed markets, was 1.6 per cent and that of gold was 9.8 per cent, according to the Post’s calculations.