Course:EOSC311/2022/Canada's Diamond

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Introduction: Diamond

Globally, Diamond is the most valued and recognized hard gemstone for their beauty and desirability within the market. Diamond account for 20% of the world's use in jewelry, and the other 80%, famous as the port, is used for research and other implications. Within the last year of 2021 and 2022, the global reserves of diamonds was an estimated 1.8 billion carats of diamond[1]. The largest producer of rough diamonds in the world is Russia, Australia, Canada, Botswana, South Africa, Republic of Congo[2]. Among those countries, Globally, Canada has the lead in mining and is ranked among the top five global producers of Potash, Diamond, gemstones, gold, indium, titanium concentrate, and uranium[3]. Placing Canada's mineral production worth $43.6 billion in 2022. At the same time, Canadian diamond mines account for18.6 million crates of rough diamonds. Canada's only the third-largest producer of diamonds in terms of value accounting for 12% and volume accounting for 13.5% of the global supply of rough diamonds. This information applies to Canadian diamond mining[3]. The statistic shows how extensive the Canadian diamond mining industry is relative to other world's largest countries of diamond producers. To understand what diamond is and why it is so valuable that it has become the world's most desired and valuable gemstone. How diamond is produced, used, and enters the market. What are the process of extraction and the utilities in primary and secondary industries? What is the value and rule of diamonds within the global economy, particularly in Canada?

To answer the primary questions above and gain a deep understanding of diamonds, on this Wiki page, I am providing information and answer to those questions. I categorized the informative response into the four sections: 1. What are a diamond and its brief history? 2. The geological process of locating and excavating diamonds. 3. Geological contrast of Canada's diamond mining industry contrasted with other largest diamond producers. 4. The global economy of a diamond.

Relationship to my Major

At UBC, I am majoring in International relations and economic major. Firstly, the reason I took this course is that recently I participated in the Vancouver investment conference, where the world's largest mining and investing companies were present and were showcasing projects. As a student, I underestimate the extensiveness and implication of natural resources and the mining industry in regard to its impact on the global economy. This topic relates to the class and my major because I am looking at the diamond mines in perspective of geology, diamond in Canada, economic prosperity, through lens of supply and demand. I will explain all factors together to understand what determines and explains the paradoxical value of diamonds in Canada. Through this project, I will be searching to study the Canadian diamond mining industry, as well as the economy.

However, over the last couple of years, the value of Diamond experienced a cyclical appreciation and deprecation in value within the market. The economy that explains this matter is called the paradox of value or the Diamond-water paradox. This theory explains the price of a good which in this case, diamond, is determined and reflected by the amount of labor and resources required to bring the diamond and other minerals to the market.

What is Diamond?

Rough diamond


Carbon makes up the rare, naturally occurring mineral known as diamond. The most vital chemical link, covalent, connects each carbon atom in a diamond to the four carbon atoms surrounding it. One of the most resilient and adaptable materials ever created results from this straightforward, homogenous, tightly-bonded configuration - diamond[4]. Properties of diamonds are their hardness, low thermal expansion, chemical corrosion-resistant, high thermal conductivity, durability, the quality of a diamond, which makes them valuable in cutting tools.

History of discovery and geological formation of Diamond

Even-though geologically, diamonds are formed over millions of years, the earliest extraction and utility of diamonds goes back to the 4th century in India. Diamond at the time was valued for their durability, strength, utility in the cutting tools, and the ability of diamond in reflecting light. A Sanskrit book was written by a minister in a northern Indian monarchy and had the earliest recorded mention of a diamond. The piece dates to between 320 and 296 BCE[5]. However, the diamonds from India and China have been transported on silk roads to Europe and other parts of the world. During the 13th, their usage was evident in European jewelry.  [5]

During the 16th century, diamonds became prominent. In the 17th and 18th centuries, they began to dominate the jewelry industry. [5]During the late 18th century, diamonds became widely worn by women and were more abundant. The significant discovery of diamond deposits in the 1870s in South Africa changed the impact of diamonds as rare gemstones to make them more available to the larger economy. The newly wealthy capitalists bought the French crown jewels in 1887. They consumed them, particularly in the United States, where the capacity for extravagant spending and consumption was rising. The extraction of diamonds in South Africa reached 1 million carats, and simultaneously, through Napoleon III in 1871. The Republic of France auctioned the diamond. Many of them were retained by companies such as Tiffany & Co[5] and De Beers;[6] despite the extensive control of supply, during 1919, the value of diamonds appreciated by nearly 50%. [6]

A D color antique diamond, set in handcrafted platinum, and accented by two side diamonds. This ring was handcrafted circa 1920 and is part of the Estate Diamond Jewelry Collection located at

Marketing of Diamond on as engagement Ring: The use of diamonds in jewelry has increased incrementally; approximately 75% of all engagement rings contain a diamond. [6]The utility diamond in the engagement ring is related to De Beers' effective marketing of increasing the value of a diamond.

Current outlook: The world's diamond reserves are quickly depleting. In the year 2021, The world's industrial diamond reserves are anticipated to reach 1.8 billion carats, and Russia, as the biggest producer, accounts for 1.1 billion carats.[7] In the Current economy, Fewer than 2% of mined diamonds are deemed "investment diamonds," and less than 20% are gem quality.[6] The industrial use of diamonds accounts for 75 to 80 percent of their mining. Industrial diamonds are often used for cutting, drilling, grinding, and polishing[7].

How Diamond are formed?

1. Formation in Earth's Mantle:

The majority of commercial diamond deposits are thought to have been formed when deep-source volcanic eruptions transported diamonds to the surface. Rapid magma ascent from the mantle's depths occurs during these eruptions, and on its way to the surface, it frequently passes through a diamond stability zone. There is a chance that rock from the diamond stability zone will come loose and be promptly brought to the surface. These "xenoliths," which are rocks, might contain diamonds.[8]

Several features associated with subduction zones.
2. Formation in Subduction Zones:

Diamonds are often found in rocks that have undergone deep subduction into the earth and then come to the surface. Diamonds formed on the subduction plate at a temperature of 200 degrees Celsius, 80 Kilometers below the surface. Blue diamond are found around 60 kilometers below the surface.

3. Formation at impact sites: Every time a huge asteroid hits the surface of the planet, it creates conditions for the production of diamonds by generating extremely high temperatures and pressures. The discovery of diamonds on the damaged areas has validated this notion, which has been tested.

4. Formation in Space:

The most well-known instance of this production pattern goes back to  Allan Hills 84001, a Martian meteorite found in Allan Hills, Antarctica, back in 1984. While examining the meteorite, Smithsonian experts found minute diamond fragments. These minute diamond shards were produced by high-speed encounters with other space objects, much like diamonds found near meteorite impact sites.[9]

5. Formation on Earth's Surface

On the earth's surface, novel processes for producing diamonds were found in the 1950s. In a lab, scientists were able to produce the temperature and pressure requirements for diamond formation. However, these were ideal for use as abrasive grains in drill bits, cutting tools, and grinding wheels even if most of the early diamonds were not gem-quality. Soon, larger lab-grown diamonds were being produced for use as heat sinks for computer processors, high-temperature windows, and wear-resistant bearings. Due to their efficiency, most industrial diamonds are made from the lap. [10]

Diamond Extraction, Mining and Processing

Diamonds are mined in the three methods: 1. Pipe mining, 2. Alluvial mining (secondary deposits), 3. Marine mining

  1. Pipe mining (primary deposit) has two distinct categories: open-pit mining and underground mining. First, Open-pit Mining: [11] The layers of rock and sand located above the sedimentary rock they are removed during open-pit mining. Once revealed, blasting is used to fracture the ore in the pit. In a single blast, approximately 3,000 tonnes of ore can be broken[12]. To begin the diamond extraction process, excavators break the ore, load it into haul trucks, and transfer it to a primary ore crusher. Second, Underground mining:
  2. Alluvial Mining (Secondary deposit): is the extraction of diamonds from the sand, mud, and river banks. When minerals are eroded from their source and transported by water to a new location, alluvial deposits are created.[13]Alluvial mining is more straightforward than the other mining methods. It requires digging and sifting through sand and mud. Alluvial mining of diamonds is more prevalent in Africa as it separates diamonds from sediment[13].
  3. Marine Diamond Mining is the deep underwater extraction of diamonds from the sea bed. Marine extraction is possible through intense and specialized technology, ships, and marine experts to mine the deep sea for the diamond. Also, drilling on the ocean floor is used to excavate diamonds. Namibia is one of the most prominent marine diamond extraction, yielding 64% of total diamond production[11].
The processing of ore in the production of rough Diamonds:

Mining and extraction of a diamond depend on the geological identification of the places. Some locations and countries might have a lot of diamonds and sources underground in the mantle. Still, on some of the surfaces, the type of diamond formation is discussed above. However, regarding the mining of diamonds in the locations, there are five stages of processing of ore to produce the rough diamond.

  1. Crashing: A crusher is used to reduce the size of the considerably larger ore bits and make them more workable. A secondary crusher is occasionally used to reduce the ore to even smaller pieces.[13]
  2. Scrubbing: Ore pieces are cleansed to remove any excess material. Following screening any ore fragments are smaller than 1.5 mm are destroyed since it would be too costly to attempt to extract from them.
  3. Cyclonic separation Plant: The diamond-bearing ore is combined with a solution made of ferrosilicon powder and water the component with the highest density are then forced to descend to the bottom of the cyclone by dumping this combination into one and spinning it around.
  4. Recovery: The leftover diamond-rich concentrate undergoes a number of processes, including magnetic susceptibility, X-ray luminescence, and crystallographic laser fluorescence. These steps will separate rough diamond form gravels that were obtained in the cyclone separation facility. additionally, diamond occasionally emit brief flashes of light that can be picked up by sensors. The gems are then spit into a collection box after being blasted with air in response.[13]
  5. Cleaned, Weighed, and Packaged: After being cleaned in an acidic solution, the diamond are then washed, weighed, and packaged for delivery. Each container is given a unique number on the spot, and it is properly sealed with a tamper- proof seal.[13]

Paradox of value - Diamond-Water Paradox

One of Adam Smith's most worrying shortcomings was his inability to provide a solution to the valuation dilemma in human decision-making. Adam Smith is regarded as the father of modern economics. He addressed this issue in The Wealth of Nations by comparing the high value of a diamond, which is not necessary for human life, and the low value of water, which is essential for human life. He concluded that the distinction between "value in use" and "value in trade" was arbitrary. [14]

It took modern economics integrating the concepts of marginal utility and subjective value to answer Smith's diamond-water paradox. [15]

Theory of Value: According to the labor theory, a good's price should represent the labor and resources needed to produce and market it. Smith thought the difficulty in bringing diamonds to market made them more expensive than water[15].

  • How this theory related to diamonds indicated and justified the value of diamond based on account of labor that went to it. Because diamonds are harder to mine than having access to water, which is abundant, this makes people value diamonds more than the necessities of water.
  • The value of a diamond is based on subjective values: Theoretically, costs should drive price, but economists have found this is not the case. Costs determine prices. Diamond is not expensive because it was hard; however, a person wearing them don't care about the sources. They care about the subjective value of, for instance, wearing a diamond piece of jewelry that is being admired socially.

Diamond Water Paradox: Marginal Utility vs. Total Utility

  • The subject value doesn't yet explain why diamonds are more expensive than water. However, alternatively, The solution was found almost simultaneously by three economists: William Stanley Jevons, Carl Menger, and Leon Walras. They explained that marginal benefit—as opposed to total use.[15]
  • 'There is no option between all the water and diamonds available to consumers. Water is a more precious resource than the extravagance of owning a diamond. As demand increases, consumers are forced to choose between purchasing one more diamond and one more water unit. This concept is referred to as "marginal utility."[16]
  • Another strategy for solving this puzzle is applying simple supply and demand ideas. Water's universal availability at little to no marginal cost will result in a low or negligible equilibrium price. On the other hand, diamonds have high demand, are expensive to produce, and the current producers have cartelized the industry. As a result, there is a little supply and a high price at the point where the supply and demand curves converge. Diamonds are "expensive," and water is "cheap."[16]

How this theory relates to diamond mining in Canada:

In the following paragraph, you will read about the international competitors in the export and imports of diamonds and the countries that are the top supplier, like Russia, Botswana, and Canada. Mainly this theory is to explain the value of diamonds in the real world and to understand how people set value for objects based on the supply, demand, and marginal utility. However, the supply and demand are also applicable in explaining the boom of the diamond industry in Canada and currently facing a decline in the production of diamonds.

Canada's Diamond Mining and the World Economy of Diamond

The World largest Diamond Producer Countries

Within international context:

In terms of value, six nations produced 91% of the world's rough diamonds., Russia produces around 32.8%, Botswana supply 17.1% and Canada, still being the third largest producer since 1989 to now, produces 13.5% of the world diamond, the following countries in terms of ranking are, Congo, D.R -10.2%, Australia- 9.4%, Angola- 6-6%, South Africa 5.2%, Zimbabwe 1.5%, Lesotho 0.8 and other countries account for 1.4% of supply of diamond world, making all these make to the 100 percent of diamond produced.[17]

Canadian Diamond Industry: History to current Outlook

Diavik Diamond Mine, which opened in 2003. The operation employs 700 people, produces about 1,500 kilograms of diamonds each year, and grosses $100 million (Canadian) in annual sales. The nearby Ekati Diamond Mine opened in 1998 and has a similar annual production to Diavik. Download the large images to see Ekati.

Canada is the third-largest producer of diamonds, yielding high-quality diamonds. Canadian diamond mining is adding value to the Canadian economy. The surge of diamond production in Canada began with the discovery of pure carbon in Point Lake near Lac de Gras in the Northwest territories; thus, the development of EKATI and Diavik mines in the Northwest began to change the course of Canadian Diamond mining.[18] Relatively, the production of diamonds of roughly 13.8 million carats, worth $2.7 billion from 1988 to 2022, made Canada the largest supplier of producing 15% of world diamonds in 2003. Canada is third in the rank after Botswana and Russia[19]. Diamond contributed substantially to boosting the economy through economic development; the diamond mine helped growth economy that ultimately booted improvement in education, employment, and society, particularly in the North. The diamond mining ensured substantial work and active production for the next 11-20 years, only EKATI and Diavik, let alone other mines across Canada.

In 2002, the economy was boosted by 5.1%, which accounted for 20% of Northwest territories' GDP and a wholesale increase of 40%. This is number makes it clear the extent of growth of the economy as a result of the diamond of two mines.[19]

From 1998 when diamond ming was just at its beginning to 2001, the employment from 100 people increased to more than 800,000 people per year. Alongside surge in the salary of 44% higher than other industries. Regarding investment, the mining industry invested $1.8 billion in the capital in the Northwest[19]. With more investment in diamonds and a boost in the economy, more mining companies explore other mining locations and expand the Canadian diamond industry to Ontario and other cities.

Current Canadian Diamond:

Most of the Canadian diamond mines are the followings:  1.Jericho, 2 Ekati, 3. Diavik,4. Snap 5. Lake, 6.Gahcho Kue,  7. Renard,  8. Victor,9. Star-Orion.[20]

The mines of number 1-5 are located in Northwest territories, and Gahcho Kue is in Qubec, Renard is in Ontario, and  Star-Orion in Saskatchewan.

By volume and value (12.5% of global production), Canada was the third-largest producer of rough diamonds in the world in 2019. (13.5 percent of world production). Canada exported $2.21 billion worth of primary diamonds overall in 2019. A 20 percent volume reduction and a 17 percent value decline from 2018 were experienced by the production of 18.6 million carats of rough diamonds by Canadian mines in 2019.[18]

Since 2019, the diamond mining industry in Canada has experiencing a decline, and some of the economic reasons and facts as as follow:

  • Four of five diamond mines show a decline in production of diamond, resulting in low volume of export of diamond and ultimately low trade of diamond with other countries in global scale.
  • Due to decreasing ore availability and a lower grade of ore from the underground operations, the number of carats recovered at Diavik fell by around 8%. Greater volume and a higher grade of ore from the A21 open pit, however, somewhat offset the reduction.[20]
  • Mining ceased at Victor early in 2019, with the last economic ore processed in the second quarter, which explains the ~35% decrease in production volume at Ontario’s first and only diamond mine.
  • The Renard mine's significant increase (of about 47 percent) is mostly the result of the mining of a higher grade zone.

Canadian Diamond Export:

  • The total value of diamond export of Canada were around $2.21 billion in 2019.
  • The value of diamond export declined by 23% because of the decline in volume value of diamond export. Which this can be explained well by the theory of value, or called water-diamond paradox.
  • Canada’s comparative and absolute advantage in export and trade of diamond are the cut and quality of the diamond.
  • Canada export mostly to India, Belgium and Botswana.[20]

Canadian Diamond Import:

  • Canada’s export is more that the import, which this  indicated that Canada is sufficient in the diamond and has the abundant of supply.
  • Canada only import around $466 million, vs the export is $2.21 billion in 2019.
  • The diamond imports to Canada decreased by %7 decreased because of the low quality of diamond to be imported to Canada.[20]

Price of Diamond: Unlike many metals and other commodities, rough gem-quality diamonds are not subject to international price regulations. Periodically, mining corporations host "sights" to advertise their product. Supply and demand determine the prices that are reached at these places for each of the different sorts of diamonds.

Map Example

Conclusion / Your Evaluation of the Connections

Globally, Canada has the lead in mining and is ranked among the top five global producers of Potash, Diamond, gemstones, gold, indium, titanium concentrate, and uranium (Government of Canada). Placing Canada's mineral production worth $43.6 billion in 2022. While Canadian diamond mines account for 18.6 million crates of rough diamonds. However, over the last couple of years, the value of Diamond experienced a cyclical appreciation and deprecation in value within the market. The economy that explains this matter is called the paradox of value or the Diamond-water paradox. This theory explains the price of a good which in this case, diamond, is determined and reflected by the amount of labor and resources required to bring the diamond and other minerals to the market.

The surge of the diamond mining in Canada was due the new discovery of diamond mines, also, due the marginal utility, there were high number of labor in producing diamond as high demand for the diamond, encouraging an expansion of the diamond industry across Canada. As current small percent decline in diamond export and import, are due a decline in supply of diamond, which also effecting the demand and the price. This very fundamental theory, that gives away the reason behind the increase and decrease in the economy, ultimately impacting the whole economy.


  1. M.Garside (Apr 1, 2022). "Global diamond reserves 2010-2021". Statista. Retrieved Jun 18, 2022.
  2. M. Garside (Jun 2, 2022). "Diamond industry - statistics & facts". Statista. Retrieved Jun 18, 2022.
  3. 3.0 3.1 Government of Canada. "Diamond facts". Government of Canada. Retrieved Jun 2, 2022.
  4. M. King, Hobert. "Diamond". Retrieved Jun 20,2022. Check date values in: |access-date= (help)
  5. 5.0 5.1 5.2 5.3 Kohn, David (May 8, 2022). "Diamonds: A History". Retrieved Jun 18, 2022.
  6. 6.0 6.1 6.2 6.3 Brilliance. "History of Diamonds". Retrieved Jun 18, 2022.
  7. 7.0 7.1 M. Garside (Apr 1, 2022). "Global diamond reserves 2010-2021". Statista. Retrieved Jun 18, 2022.
  8. Carnegie Institution for Science (March 31, 2021). "Diamonds That Formed Deep in the Earth's Mantle Contain Evidence of Deep-Earth Recycling Processes". SciTechDaily. Retrieved Jun 22,2022. Check date values in: |access-date= (help)
  9. "Diamond Facts: All Interesting Facts About Diamonds". Diamond101. July 29, 2021.
  10. M.King, Hobert. "How Do Diamonds Form?". geology. Retrieved Jun 22, 2022.
  11. 11.0 11.1 Cape town, New York. "DISCOVER DIAMONDS - MINING". Shimansky. Retrieved Jun 18, 2022.
  12. "Diamond Mining". Cape Town Diamond Museum. Retrieved Jun 18, 2022.
  13. 13.0 13.1 13.2 13.3 13.4 Melissa, Pisrilli (Mar 17, 2022). "Alluvial Mining: Gold, Diamonds and Platinum". Precious Metals. Retrieved Jun 18, 2022.
  14. "diamond-water paradox". Encyclopedia Britannica.
  15. 15.0 15.1 15.2 C.Kelly, Robert (August 23, 2022). "The Diamond-Water Paradox, Explained". Investopedia.
  16. 16.0 16.1 "Understanding The Water And Diamond Paradox Is Valuable Because It Explains Why?". Real Onomics. |first= missing |last= (help)
  17. 17.0 17.1 "Diamond facts".
  18. 18.0 18.1 18.2 "Diamond in Canada" (PDF). Gem and Gemology. Summer 2022. |first= missing |last= (help)
  19. 19.0 19.1 19.2 Santarossa, Bruna. "Diamonds: Adding lustre to the Canadian economy". Statistics Canada. Retrieved Jun 23, 2022.
  20. 20.0 20.1 20.2 20.3 "Diamond Fact". Government of Canada. feb 22, 2022. Check date values in: |date= (help)
  21. M. King,, Hobart (Jun 8 2022). "Diamond Mines in Canada". Retrieved Check date values in: |access-date=, |date= (help)CS1 maint: extra punctuation (link)
  22. Missing or empty |title= (help)

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