Mining New Opportunities for Natural Diamonds in Cutting Tool Applications

Prospect Heights, NY--In 2003, world production of industrial diamonds will exceed 900 million carats (see Chart A). The majority of these will be used in abrasive and cutting tool applications. Manufacturers of cutting tools and superabrasives have long recognized the advantages of diamond over other abrasive products, such as ceramic and cemented carbides, but have not been able to justify the added expense of using diamond products over these less expensive materials. Continually, however, efficiencies in synthetic diamond production and the development of untapped mines in Canada and South America, lower the cost of diamond materials. The result has sparked an increased interest in diamond tools.

The US market for cutting tools, such as drill bits for construction, saw blades and grinding wheels, has been dominated by materials such as aluminum oxide ceramics or tungsten carbide as the abrasive component. However, superabrasives such as cubic- or polycrystalline boron nitride and diamonds offer distinct advantages, such as greater wear resistance and cleaner finish. These characteristics result in increased tool life (in some cases by a factor of fifty.) The main disadvantage of superabrasives is price which can be as much as ten times greater than ceramic or carbide. Ironically, the tool would long outlive the times-ten price differential, but OEMs contend that the tool actually outlives the job for which it is needed, and that buying five carbide blades, for instance, is more cost effective than buying one diamond tool blade. Thus, the market for ceramic and carbide cutting tools continues to represent a huge potential for diamond tool makers.

Within the cutting tools superabrasives sector (i.e., diamond and CBN/PCBN), the market for diamond tools makes up slightly over 60% of the total consumption value. Over 94% of the industrial diamonds used will be synthetically produced (see Chart B). This is despite the recent mining activities in Northwest Canada by companies such as BHP Billiton and DeBeers which will yield over 10 million carats yearly by 2006. Even with the increased market for natural industrial diamonds which will reach 67.7 million carats by 2008, the industrial diamond industry will remain dominated by synthetic products which will equal approximately 1,182.8 million carats by 2008.

Manufacturers of synthetic diamonds, such as GE Superabrasives, E6 (DeBeers synthetic diamond division), Ilgin and St. Gobain, contend that the market for synthetic diamonds will retain its stronghold within the industrial diamonds arena mainly due to cost and supply issues. Although new diamond discoveries are being developed every year, the output of natural diamonds will simply meet demand. The new natural diamond discoveries represent a significant market factor in that they will help meet growing demand, but natural diamonds will never supplant the market for synthetic products except in markets, such as wire drawing, where individual stone size is specified for production.

This information is based on a research report entitled Hard & Superhard Materials--World Markets, Technologies & Competition: 2003-2008 Analysis published in October 2003.

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