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.
The 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.