The headlines write themselves. Have diamonds lost their sparkle? Will diamonds still be forever? Are diamonds really a girl’s best friend?

Say it however you like, it’s hard to ignore the distinctly sluggish sales process around BHP Billiton’s and Rio Tinto’s diamond assets.

For a while the stage seemed to be set for a new diamond player to pick up the 14 per cent of global production up for grabs from the two mining heavyweights.

But months later, with reports private equity giant KKR has cooled on plans to pick up BHP’s Ekati mine in Canada and another rumoured would-be buyer, North America’s Harry Winston, suggesting any deal is still months away, sentiment around the sector could hardly be described as red hot.

Against this backdrop it comes as little surprise to hear talk UK-listed Gem Diamonds has all but abandoned plans to sell WA’s Ellendale diamond mine in the Kimberley after failing to attract a sufficiently attractive bid.

There’s been no official word from Gem Diamonds, which brought in Gresham Advisory Partners late last year, but binding bids were expected back in April.

It’s hardly fair to draw a comparison between the BHP and Rio’s assets and Ellendale, given the latter’s troubled history and short mine life.

The lower value E4 pipe has been closed for years and the project’s single producer, the E9 pipe, is expected to produce its last diamonds in 2014.

Still, signs are that it’s making money for Gem Diamonds thanks in part to a long-term contract with high-end jewellery designer Tiffany & Co for its fancy yellow diamonds (that “fancy” isn’t this column making a personal judgment, by the way, that’s what they’re called).

Prices for the three months to March 31 were more than double that for the same quarter in 2011, with an average price of $US1049 a carat and $US4326/c for the fancy yellow diamonds.

Prices for diamonds, which took a dive at the height of the global financial crisis, have since largely recovered, with European demand at least in part offset by strong growth out of China and India.

Gem paid $300 million in 2007 to buy Ellendale from then-business partners Miles Kennedy and Karl Simich.

Barring any surprises, all signs point to the operation staying in Gem’s hands.

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