The Value Chain
On its journey from deep in the Earth’s crust to its exquisite polished form, a diamond travels through many highly skilled hands.
Mining natural diamonds
Cutting & polishing
Jewellery & retail
Mining natural diamonds – the upstream
Diamond formation
Aged at between 1 and 3.3 billion years, diamonds are one of the oldest substances on Earth. Diamonds were formed deep within the Earth’s mantle between 140 to 190 kilometres below surface, where the high temperature and pressure conditions resulted in the crystallisation of carbon into diamond. The diamonds were then forced through the Earth’s upper mantle towards surface, too fast for their crystalline structure to degrade to graphite, during rare volcanic eruptions of molten rock. As the volcanoes cooled, the magma hardened into carrot shaped ‘pipes’, known as kimberlites.
Open pit mining
Mining of a diamond-bearing kimberlite starts with the excavation of a pit into the kimberlite pipe. In this process, called ‘open-pit’ or ‘open-cast’ mining, the initially weathered ore material is removed with large hydraulic shovels and ore trucks. Hard rock is drilled and blasted with explosives so the broken material can be removed. Petra is employing open pit mining at the Williamson mine in Tanzania.
Underground block caving
Eventually, once the depth of the pit and the strip ratio to reach new ore becomes prohibitive, mining of a kimberlite will move underground. A ‘block’ of ore (generally 100 to 200 metres high) is undercut to initiate caving, whereby gravity is used to make ore ‘cave’ under its own weight. The undercut zone is drilled and blasted progressively and broken ore is drawn down to create a void into which initial caving of the overlying ore can take place. As more broken ore is drawn progressively, the cave propagates upwards through the block until the overlying rock also caves and surface subsidence occurs. Find out more about the mining process.
New levels of block caving can be constructed deeper into the pipe once an existing block of ore has been exhausted.
The cave mining method is used by Petra at its underground operations in South Africa (Finsch, Cullinan).
Ore Handling
Ore is removed from drawpoints by LHD vehicles and is further broken down by passing through a ‘grizzly’, before being extracted to the haulage level either by conveyor belt or locomotive. Ore is then transported to the plant via the main shaft.
Plant Processing
Kimberlite is crushed into progressively smaller sizes in order to eventually liberate the diamonds from the ore. The material is processed through the plant using screens, jigs, scrubbers, gravity pans and dense media separation. Diamonds are finally extracted using X-ray technology and grease tables.
Tailings processing
Tailings are residual material from the plant, which may contain economic grades due to early, inefficient processing of high grade kimberlites and alluvial deposits. The opportunity exists to reprocess tailings dumps in order to recover those diamonds that were missed first time around.
Extraction and processing
During the upstream stage, diamonds are mined from the ground, then sorted and sold by producers, either through long- or short-term contracts or auctions.
Long-term contracts and auctions account for about 30-65% of rough diamond sales respectively. Short-term contracts account for the remainder of sales and are normally “used to sell leftovers or stones that fall outside the typical size range.
Rough diamond production is considered the most attractive part of the value chain, with profit margins of 16-20%.
c.117 million carats were produced in 2022, with a total value of c.US$90 billion.
At Petra
Our highly skilled team uses both underground and open pit mining methods.
Petra employs 5,033 people across its operations, using highly mechanised and the most up to date mining technology.
Sorting, distribution and sales
Once processed, the diamonds are sorted by size and then quality and organised into parcels according to their shape, size, clarity and colour. Each diamond producer has a different way of selling their particular goods.
At Petra
We sell our diamonds at regular tenders organised in-house. These are timed around specific calendar events and coordinated to maximise attendance and value for our diamonds.
Cutting and polishing– the midstream
Considered the most complex part of the value chain, the midstream, is responsible for processing and preparing rough diamonds for sale to the downstream sector.
This is a highly technical process, which begins with planning followed by cutting (cleaving) and polishing. The aim is to maximise the yield from the rough and reveal the diamond’s unique natural beauty.
After a stone has been cut and polished, it is certified according to the 4Cs: Cut, Colour, Clarity and Carat.
Distribution and sales
Diamond dealers tend to be based in the hubs of Antwerp, Dubai, Mumbai and Tel Aviv, which have diamond bourses, also known as diamond exchanges or diamond trading centres.
Like in the upstream stage, middle-market participants sell diamonds mainly through long-term contracts, auctions and short-term or one-time sales. The middle market has traditionally garnered the lowest profit margins along the diamond value chain, averaging 1-8%.
Jewellery and retail – the downstream
The downstream stage consists of selling diamonds, set in jewellery, to customers.
Global diamond sales of diamond jewellery have grown steadily over the past 25 years, tripling in value and now exceeding US$72 billion annually.
Given their rarity, diamonds are often considered in the same realm as rare pieces of fine art – retaining or increasing in value and often handed down through generations.
This area of the value chain garners larger profit margins of c11-14%.
Giving back through the value chain
On its path to becoming a treasured piece of jewellery, a diamond touches hundreds of lives. We continually look to build on our culture that nurtures our workers, our communities and the environment around us.
At Petra
We strive to give back to the communities and environments impacted by a diamond’s unique journey, fostering sustainable development and positive change.