Selling the Crown Jewels: Diamond Royalties and Marketing Agreements in Canada

Peter L. Webster and Chris G. Baldwin

This paper is intended as an introduction to the subject of diamond royalties and marketing agreements in Canada. Diamonds are marketed and sold on the basis of the distinctive characteristics of each stone. The process of diamond sales therefore involves a degree of subjectivity absent from fungible mineral commodity sales in the international commodities market where published prices are readily available. The paper briefly discusses diamond geology, diamond production and diamond marketing practices. It will then address the use of diamond royalty agreements and diamond marketing agreements in Canada and present practical guidance for transactional attorneys regarding the specific issues which should be considered in drafting these documents.