Rio Tinto announced that it is considering exiting its diamond business. The company has begun a strategic review of the diamond unit that will include exploring a range of options for potential divestment of its diamond interests.
“We regularly review our businesses to ensure they remain aligned with Rio Tinto’s strategy of operating large, long-life, expandable assets,” said Harry Kenyon-Slaney, the chief executive of diamonds and minerals at Rio Tinto. “We have a valuable, high-quality diamond business, but given its scale we are reviewing whether we can create more value through a different ownership structure.”
Rio Tinto owns the Argyle mine in Australia along with a 60 percent stake in the Diavik mine in Canada and 78 percent share of the Murowa mine in Zimbabwe. It also owns the Bunder development project in India. However, production has been on the decline in recent years as Argyle approaches the end of its life and Diavik shifts to an underground operation. Rio Tinto’s diamond production fell 15 percent to 11.7 million carats in 2011. Diamond sales rose 7 percent year on year to $727 million during the year.
Kenyon-Slaney stated that the process may take some time and its business is very much as usual in the states and countries where the company operates.
“The diamonds market outlook is very positive, with demand growing strongly and lack of new discoveries limiting supply,” Kenyon-Slaney said.
Rival BHP Billiton in February stated that it expected to complete reviewing all options for the Ekati diamond mine in Canada by June. Ekati production fell 32 percent to 938,000 carats and revenue dropped 16 percent to $357 million for the six months that ended on December 31, 2011.
BHP has already sold its stake in the Chidliak diamond project to Peregrine Diamonds after the mining giant decided to sell-off its diamond assets in November 2011.