Just four months after BHP Billiton’s announcement that it is “reviewing” its diamond business, Rio Tinto has also announced “a strategic review” of its diamond business.
Announcing the new review, Rio Tinto’s chief executive Diamonds & Minerals, Harry Kenyon-Slaney, said the company regularly reviews its businesses to ensure they remain aligned with its strategy of operating large, long-life, expandable assets.
“The diamonds market outlook is very positive, with demand growing strongly and lack of new discoveries limiting supply,” he said.
“We have a valuable, high quality diamonds business, but given its scale we are reviewing whether we can create more value through a different ownership structure.
“This process may take some time. We’re committed to keeping stakeholders informed about any key developments, and in the meantime are reassuring employees and the governments in the states and countries where we operate that it is very much business as usual.”
Rio Tinto is one of the world’s major diamond producers through its 100 per cent control of the Argyle mine in WA as well as 60 per cent interest in the Diavik mine in Canada, 78 per cent interest in the Murowa mine in Zimbabwe and 100 percent interest in Bunder, an advanced diamonds project in India.
The company’s announcement follows BHP Billiton’s November 30 announcement that it is reviewing its interests in the EKATI Diamond Mine and the Chidliak exploration project in Canada.
In its announcement, BHP said the company’s strategy was “to invest in large, long life, upstream and expandable assets while remaining a simple and scalable organisation”.
“EKATI is a world class operation and Chidliak is a promising exploration opportunity, but many years of extensive exploration suggest there are few options to develop new diamond mines that are consistent with this approach.
“This review will, therefore, examine whether a continued presence in the diamonds industry is consistent with BHP Billiton’s strategy and evaluate the potential sale of all or part of the diamonds business.”
On December 20 BHP Billiton confirmed that it had agreed to sell its 51 per cent interest in the Chidliak diamonds exploration project to Peregrine Diamonds for C$9 million over three years and “a two percent royalty on future production”.