Mining company expecting to produce 14.6m carats by end of 2012.
Mining giant Rio Tinto has released its H1 underlying results for its various sectors, with its diamond and minerals revenue up 12% to US$350 million (£225m) compared to H1 2011.
The diamond and mineral sector’s underlying earnings of $203 million (£130m) were 107% higher than H1 last year. The group said it had benefited from higher prices across the industrial minerals business and increased diamonds production.
Its rough diamond demand experienced a “modes slowdown” in H1 across established markets, though Rio Tinto says its long term outlook remains robust, and it hopes to product 14.6 million carats of diamond rough by the end of 2012.
Diamond production at its Argyle mine in Australia was 24% higher in H1 2012 compared to the first half of 2011, due primarily to the impact of heavy rains and flooding in March 2011.
Construction of the underground mine at Argyle is proceeding however, and Rio Tinto says that production is scheduled to commence in the first half of 2013. Production at its Diavik mine in Canada was 8% higher than H1 2011 due to open pit volumes and improved grades.
Earlier this year Rio Tinto announced that it would hold a “strategic review” of its diamond business, which paved the way for numerous suggestions that it would be looking to sell its diamond mine operations, worth about £1.25 billion. The company today revealed that it has since explored a range of options “for potential development” of its diamond interests, but has not confirmed bids from any other mining operator, despite rumours of interest from KKR.
Despite plans to potentiall pull away from diamond production, Rio Tinto has continued to spend on its diamond mining operations, having increased capital expenditure on its diamond assets by 69% to $273 million (£175m) in H1. It also increased its stake in Richard Bay Minerals to 74%, having acquired BHP Billiton’s 37% interest.
Rio Tinto added that prices and demand outlook remain strong for industrial minerals in the medium and long term, driven primarily by urbanisation in emerging economies.