Sometimes on the way to your dream,

you get lost and find a better one.

Saturday, September 14, 2013

Ever wondered why diamonds are so expensive?

Here's a passage form the book I am currently reading which explains it quite well.

Bones are Forever by Kathy Reichs

The book is fiction and the story set in Alaska.
All place names are probably fictional, I haven't checked.  
Although I've read that Kathy Reichs does research her subjects fairly extensively, so perhaps they are real place names. 

The passage I've reprinted here is a conversation between two people.

"I've learned why bling is so bloody expensive.
First you have to find the diamonds. Then you have to do a feasibility study to determine how much the mine will cost and how to build it. Then there's the red tape: environmental agreements, land-use permits, water licenses, impact-benefit agreements, socioeconomic agreements.
Approval involves dealing with Federal, territorial and aboriginal governments, regulatory agencies, land owners-everyone from the local farmer right up to the Pope.
Then you have to build the mine, which, in this climate, is a nightmare. The sites are so isolated that all personnel and supplies have to be flown in, or transported over winter roads."

"Ice road truckers!"
 
"Do you know what it costs to operate an ice road?"
"I do not."
"Lupin runs for almost six hundred kilometers.......Construction and maintenance cost roughly six point five million dollars annually...... And the ice roads are only open maybe ten weeks a year."

"That's just one budget item. Landing strips, power stations, machine shops, sewage and waste disposal, water treatment plants, telephone networks, storage buildings, offices, processing plants. and the workers can't exactly drive home each night. The mines have to provide housing, food, recreational facilities. A Lot of the miners work two-week rotations. That's a long time to have nothing to do.......Ekati construction cost nine hundred million dollars. Diavik cost one point three billion-that's billion- dollars."



So there's at least part of the reason .
All of the initial cost must be recovered and then the companies wish to see a profit too.

Now you know why those sparkly little rocks cost more than your house. Or maybe just more than your car. 

Thank you, Kathy Reichs for this information.

10 comments:

  1. Hi River,

    Well this certainly explains it well. I'm going to get Penny to read this posting. The cost of her doggy bling is costing a fortune. Diamonds are forever, evidently.

    Enjoy the rest of your weekend.

    Gary

    ReplyDelete
  2. I read that book earlier this year. I suspect that Alaska is an extreme case - more expensive so the profits also need to be higher...

    ReplyDelete
  3. klahanie; doggy bling is almost as expensive as people bling. Have you seen the cost of good quality dog toys?

    Elephant's Child; you're right, Alaska is more extreme, but still, the costs of setting up and maintaining a mine would still be huge. I imagine the cost of diamonds would be much cheaper if we could just find them lying about....but then they wouldn't mean as much either.

    ReplyDelete
  4. I too love Kathy Reichs' books but not sure if I've read this one or not although the title sounds familiar.
    I think EC is right when she says diamond mining in Alaska would be very expensive but then setting up a mine anywhere would cost a huge initial outlay plus running costs which would of course add to the cost of the diamonds in the store.
    Yes, I'm sure I've read this book but will check. She is usually quite accurate with anything in her stories. A bit like Dick Francis whose wife used to do his research and I've learnt so much from his book about all types of different things. I was saddened when he died.

    ReplyDelete
  5. I wonder if people ever look about and realize the investment made in things they just take for granted: roads, bridges, doctor's offices. Things they enjoy: hiking trails, boat docks, amusement parks.

    ReplyDelete
  6. It may explain why diamonds being dug up now cost a lot, but they have always been very precious.

    ReplyDelete
  7. I think the world wouldn't suffer if we no longer destroyed our planet looking to strip it of all its natural resources :)

    ReplyDelete
  8. Mimsie; it's one of her newest books, I'm currently reading Bones of the Lost which came after it. I agree setting up a mine anywhere is horrendously expensive, it's probably similar to collecting real pearls. There's the waiting for pearls to develop, the diving, etc. Cultivated pearls are quicker and cheaper, as are cubic zirconias, the artificial diamonds. I haven't heard of Dick Francis, what did he write?

    Delores; me too.

    Joanne; probably not, unless the know people in the relevant industry. I have a brother in the concrete construction industry, so I'm aware of the time, hard work and cost involved in building dams, overpasses, storage silos etc.

    Andrew; always precious because there is nothing that compares. Cubic zirconias are close, but those who can tell the difference (not me) will tell you they don't match up.

    Gabrielle; I agree, but there are some who would be mighty put out if they couldn't get their new diamond earrings or the latest style in pearl necklaces etc. Of course no more mining would make the existing gems so much more valuable.

    ReplyDelete
  9. I'm about to log off to have a late Sunday tea. I think MOH may have dozed off so had better go check on him. I will send a message about Dick Francis when I have more time to explain who he is (was) and the type of book he writes which are mysteries of all kinds. I think you would enjoy his work. Goodnight from Perth.

    ReplyDelete