For 30 years, jeweler John Calleija has been purchasing rare gems from Rio Tinto Group’s Argyle mine in remote Western Australia, home to 90% of the world’s prized pink diamonds.

On a recent rainy afternoon in New York’s Peninsula Hotel, the Australia-based Calleija studied some of the rarest pink and red stones through a magnifying glass as part of Rio Tinto’s annual pink diamonds tender, which held a total of 64 diamonds making up 56.28 carats. The intense quiet in the room was broken only by Calleija’s occasional murmurs of approval at the gems’ cut and clarity.

The stones themselves are always breathtaking, but this year’s tender also had a heightened sense of nostalgia. The Argyle mine is set to close at the end of next year, now that its supply of economically viable jewels has been exhausted.

“Now it’s getting really close, it’s a matter of months,” Calleija said. “We’ve seen a big increase in demand at the moment. It seems to be just within the beginning of this year—people are more and more getting it.”

Since it opened in 1983, the mine has produced more than 865 million carats of rough diamonds for both ends of the price spectrum. Now it’s down to the last 150 carats of polished pink diamonds.

As the biggest diamond producer by volume, and with more than three-quarters of its output composed of lower-value brown diamonds, the Argyle mine is at the center of a global oversupply of cheap diamonds, eroding profits for nearly everyone. De Beers trimmed its production plans earlier this year amid a flood of polished diamonds and stagnant consumer purchasing.

RBC Capital Markets and Panmure Gordon have predicted the closure could kick-start prices that have waned since 2011.

For pink diamonds the effect could be massive, says Larry West, owner of LJ West Diamonds in New York. “These are the rarest diamonds in the world,” he says. “There is nothing like it, and the mine can never be duplicated.”

Demand for Diamonds
According to Rebecca Foerster, president for North America at Alrosa PJSC, the prices for pink diamonds have risen 300% in the past decade.

“Since there are no other equitable sources of pink diamonds, we can expect that after the closure of Argyle mine over the next year, the market will face some shortage of pink diamonds supply,” she says.

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