Why are only a small percentage of known diamond deposits mined?

Why are only a small percentage of known diamond deposits mined?

• A. Not profitable
• B. Too deep
• C. Not known
• D. Overlooked

Answer: (A)

The key idea is economic viability: mining decisions are driven by whether the value of the diamonds that could be recovered from a deposit outweighs all the costs to extract, process, and bring them to market, plus the initial capital, operating, environmental, and regulatory expenses. Some deposits are geologically rich, but if the ore grade is too low or the deposit is located too deep, remote, or technically challenging to mine, the cost per carat becomes higher than the potential selling price. In such cases, the project isn’t financially attractive, so it isn’t developed. Only a small subset of known deposits have the right combination of high enough grade, sufficient size, accessible depth and infrastructure, and favorable market conditions to be profitable, so they become mines. The other possibilities—being too deep, not known, or overlooked—don’t capture the dominant hurdle as effectively as profitability does.

The key idea is economic viability: mining decisions are driven by whether the value of the diamonds that could be recovered from a deposit outweighs all the costs to extract, process, and bring them to market, plus the initial capital, operating, environmental, and regulatory expenses. Some deposits are geologically rich, but if the ore grade is too low or the deposit is located too deep, remote, or technically challenging to mine, the cost per carat becomes higher than the potential selling price. In such cases, the project isn’t financially attractive, so it isn’t developed. Only a small subset of known deposits have the right combination of high enough grade, sufficient size, accessible depth and infrastructure, and favorable market conditions to be profitable, so they become mines. The other possibilities—being too deep, not known, or overlooked—don’t capture the dominant hurdle as effectively as profitability does.