Rio Tinto may sell diamond mines worth £1.25bn

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Mining giant “reviewing” gems in pursuit of iron ore production.

Gemstone and metal mining giant Rio Tinto, owner of the Argyle pink diamond mine in Australia, Diavik in Canada and the Murowa mine in Zimbabwe, is reviewing its gemstone operations with a view to pursuing alternative routes.

In a media release posted yesterday by the company, Rio Tinto said it had “begun a strategic review” of its diamond business that will include exploring a range of options for potential divestment of its diamond mining operations.

Its diamond operations are said to be worth in the region of £1.25 billion, a sum which, if sold, is likely to fund Rio Tinto’s plans to expand into iron ore production in western Australia.

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Harry Kenyon-Slaney, chief executive diamonds and minerals at Rio Tinto said: "We regularly review our businesses to ensure they remain aligned with Rio Tinto’s 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. 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.”

Both The Telegraph and London’s Evening Standard hinted at potential buyers, including private equity firm KKR and diamond brand and manufacturer Harry Winston.

Harry Winston was last week reported to be eyeing a stake in the Ekati diamond mine in Canada after BHP Billiton (BHP), which has majority stake in the mine, announced it was also set to pursue iron ore mining, with the possibility that it will put its part of the business up for sale.

Kenyon-Slaney explained that any sale of Rio Tinto’s diamond assets would not be a quick one. "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 operates three diamond mines, Argyle in Australia (100% interest), Diavik in Canada (60% interest), and Murowa in Zimbabwe (78% interest). It also oversees Bunder, an advanced diamonds project in India.

 

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