The Argyle mine in far north-west Australia represents about 6 per cent of all sales by the Central Selling Organisation, part of De Beers. The CSO controls around 80 per cent of the world's diamond trade by buying raw gems from most of the world's producers.
Analysts fear this move could prompt Russia to reconsider its decision to stay in the CSO.
"The question is: Will the Russian agreement survive this change?" said David Walker, director of research for gold and diamonds at ABN Amro Hoare Govett in Melbourne. "They might ask the CSO how come you can't even keep your own people in line?"
While Argyle, which is 56.8 per cent owned by the world's largest mining company RTZ-CRA and 38.2 per cent by Ashton Mining, is the world's biggest diamond mine by volume, it produces a large quantity of small sized, low value gems. These are fed to the Indian cutting market for jewellery production.
"Loss of a club member is a disappointment," said Tim Capon, executive director of the CSO. "But you have to put it in perspective - Argyle only represents 6 per cent of the value in terms of our business - and I don't see it as an earth shattering event."
In February, De Beers signed a memorandum of understanding with Russia, which is expected to guarantee that 26 per cent of total CSO sales come from Russia. The new accord is also supposed to limit the amount of gems Russia sells to non-CSO buyers.
Mr Capon said negotiations about a full agreement with Russia's diamond mining and trading group Almazy Rossii Sakha are continuing, though they have been slowed down by the forthcoming Russian election. He said he did not expect the Argyle decision to have any impact on the Russians.
In its 1995 annual report, De Beers blamed production from Argyle in the last decade for "world over-supply" of smaller and cheaper diamonds and the reduction in their prices.
The average value of Australian diamonds is US$15 per carat, compared with $100-$120 per carat in South Africa, and $200 for offshore African deposits.