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Released August 29, 2012 | JOHANNESBURG
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Written by Richard Finlayson, Senior International Editor for Industrial Info Resources (Sugar Land, Texas)--In March this year, Rio Tinto plc (NYSE:RIO) (London, England) announced that the company was going to review its diamond business and would consider divesting diamond mines in Australia, Canada, India and Africa to focus on expanding in more profitable commodities, such as iron ore, copper and uranium.
In something of a surprise announcement last week, the company appears to have made a decision against exiting the diamond industry, saying that it will invest $500 million in developing the Indian Bunder diamond mine in Madhya Pradesh. Brian Cox, the managing director of Rio Tinto Diamonds, said that commercial production is likely to start in 2016.
Last year, the company mined 11.7 million carats of diamonds and the current value of diamonds assets on its books is $1.2 billion. But industry analysts say that when including the company's flagship Argyle diamond mine in Australia, the assets could be worth about $2 billion.
Rio is the world's third-largest diamond miner after De Beers (South Africa/Botswana) and Alrosa (Moscow, Russia). In November 2011, mining major BHP Billiton (NYSE:BHP) (Melbourne, Australia) announced that it would review its diamond assets and examine whether its presence in the diamond industry was consistent with its strategy of investing in expandable assets.
In December 2011, BHP sold a 51% stake in the Chidliak exploration project in northern Canada and is looking for a buyer for its 80% stake in Canada's Ekati mine, worth about $740 million.
Rio has experienced an earnings drop of 86% to $10 million for 2011 on revenue of $727 million. This drop is due to lower production and higher costs at the open-pit Argyle mine, which is undergoing a $2.1 billion expansion. The Bunder deposit is the first diamond discovery in India in more than 50 years. Rio's resource estimate stands at 37 million tons, containing 27.4 million carats. More than 66% of Rio's diamonds are cut in India.
Industrial Info Resources (IIR), with global headquarters in Sugar Land, Texas, and eight offices outside of North America, is the leading provider of global market intelligence specializing in the industrial process, heavy manufacturing and energy markets. Industrial Info's quality-assurance philosophy, the Living Forward Reporting Principle, provides up-to-the-minute intelligence on what's happening now, while constantly keeping track of future opportunities.
In something of a surprise announcement last week, the company appears to have made a decision against exiting the diamond industry, saying that it will invest $500 million in developing the Indian Bunder diamond mine in Madhya Pradesh. Brian Cox, the managing director of Rio Tinto Diamonds, said that commercial production is likely to start in 2016.
Last year, the company mined 11.7 million carats of diamonds and the current value of diamonds assets on its books is $1.2 billion. But industry analysts say that when including the company's flagship Argyle diamond mine in Australia, the assets could be worth about $2 billion.
Rio is the world's third-largest diamond miner after De Beers (South Africa/Botswana) and Alrosa (Moscow, Russia). In November 2011, mining major BHP Billiton (NYSE:BHP) (Melbourne, Australia) announced that it would review its diamond assets and examine whether its presence in the diamond industry was consistent with its strategy of investing in expandable assets.
In December 2011, BHP sold a 51% stake in the Chidliak exploration project in northern Canada and is looking for a buyer for its 80% stake in Canada's Ekati mine, worth about $740 million.
Rio has experienced an earnings drop of 86% to $10 million for 2011 on revenue of $727 million. This drop is due to lower production and higher costs at the open-pit Argyle mine, which is undergoing a $2.1 billion expansion. The Bunder deposit is the first diamond discovery in India in more than 50 years. Rio's resource estimate stands at 37 million tons, containing 27.4 million carats. More than 66% of Rio's diamonds are cut in India.
Industrial Info Resources (IIR), with global headquarters in Sugar Land, Texas, and eight offices outside of North America, is the leading provider of global market intelligence specializing in the industrial process, heavy manufacturing and energy markets. Industrial Info's quality-assurance philosophy, the Living Forward Reporting Principle, provides up-to-the-minute intelligence on what's happening now, while constantly keeping track of future opportunities.
