Ironically, as De Beers suffers, the Argyle mine, which left the cartel a couple of years ago, is not only doing well, but may extend its life.
When De Beers and Argyle went their separate ways a few years back, many thought De Beers wasn’t so interested in Argyle because the mine had a limited time left. While the Australian mine was originally due to expire a little after the year 2000, it is now signaling that it will stay around a while, and recently announced that it will develop a new pit. The new pit would extend the mine’s life and could be a pre-cursor to “underground” mining, which would mean its life would be extended even longer.
With De Beers cutting back its sales of smaller goods, Argyle has scored a bonanza—with sales hitting a record $229 million for the six months ending June 30—18% higher than the year before.
Argyle says two trends have helped its growth: the continued good news from the United States, a leading market for Argyle goods, and “trading down” in the troubled Southeast and East Asian markets. In fact, business in the small-stone market is apparently so good that De Beers has been loading sights up with small stones, hoping to get a part of the action.
Yet, despite all the good news for Argyle, there was recently a shake-up at Ashton Mining, one of the co-owners of the Argyle mine. Its chief executive and managing director—and frequent critic of De Beers—John Robinson and chairman Nobby Clark both resigned.
Analysts said the shake-up was due to poor results from some recent Ashton finds.