KKR Plans to Combine BHP, Rio Tinto Diamond Assets

New York-based investment firm Kohlberg Kravis Roberts & Co. (KKR) is planning to ‎combine the diamond assets from Rio Tinto and BHP Billiton, the Sunday Times reported. ‎

Ekati MineThe report noted that the company is leading a bid against Harry Winston Diamond Corporation ‎and Stornoway Diamond for the Ekati mine in Canada, which is BHP Billiton’s only ‎remaining diamond asset. ‎

BHP announced in November 2011 that it intended to exit the diamond market as ‎the industry does not fit its strategy to invest in large, long life, upstream and expandable ‎assets. Rio Tinto made a similar announcement in March 2012 regarding its diamond ‎operations, which include the Argyle mine in Australia, 60 percent of the Diavik mine in ‎Canada and 78 percent of the Murowa mine in Zimbabwe.‎

KKR is planning to combine the two diamond businesses and has appointed Brian ‎Mennell to advise on its plans, the Sunday Times said without citing sources. ‎

The combined businesses would create the third largest diamond producer behind De ‎Beers and ALROSA. Rio Tinto’s diamond production fell 15 percent year on year to ‎‎11.73 million carats, while its diamond revenues increased 7 percent to $727 million in ‎‎2011. BHP Billiton’s diamond production declined 18 percent to 2.5 million carats with ‎revenues up 12 percent to $1.1 billion. ‎

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