Rio Tinto halts plans to sell diamond business

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Company opts to keep mining operation owing to robust stone demand.

Rio Tinto has announced that it will retain its diamond business following a strategic review of its operations which included a potential sale or divestment.

The mining company, which also mines metals and minerals including copper, aluminium and iron ore, announced in March 2012 that it had launched a strategic review of its diamond mining activities and was exploring a range of options for potential divestment of its diamond operations.

Rio Tinto diamonds and minerals chief executive Alan Davies said: "The medium to long-term market fundamentals for diamonds remain robust, fuelled by growing demand for luxury goods in Asia and continuing strong demand in North America.

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“We have valuable, high-quality diamonds businesses that are well positioned to capitalise on the positive market outlook. After considering a number of alternative strategic ownership options it is clear the best path to generate maximum value for our shareholders is to retain these businesses.”

In April last year asset management firm KKR was rumoured to be a frontrunner to buy Rio Tinto’s diamond business, though this failed to materialise.

The company recently announced the appointment of a new CFO for diamonds, Paul Dean, and plans to sell a number of rare red diamonds at tenders later this year.

Rio Tinto own a 100% stake in the Argyle mine in Australia, 60% of the Diavik mine in Canada and a 78% interest in the Murowa mine in Zimbabwe.
 

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