A second miner of Canadian diamonds may be looking at getting out of the business.
Rio Tinto—which owns 60 per cent of the Diavik mine—announced it had begun a strategic review of its diamond interests and “exploring a range of options for potential divestment.”
The news comes less than six months after rival BHP Billiton said it was reviewing its continued presence in the diamond industry.
Rio Tinto wholly owns the Argyle mine in Australia and Bunder, an advanced diamond project in India. It holds a 78 per cent interest in Zimbabwe’s Murowa mine.
“The diamonds market outlook is very positive, with demand growing strongly and lack of new discoveries limiting supply,” said Rio Tinto’s diamonds and mineral chief executive, Harry Kenyon-Slaney. “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 Rio Tinto and BHP put their diamond units at about two per cent of their total business.
Mel Moss, president of Regal Imports and a dealer of BHP’s CanadaMark program, says a sale of either mine is not likely to impact the Canadian diamond industry or should be seen as a bad sign for the diamond sector in general.
“In the grand scheme of things, this won’t make a difference to the Canadian diamond industry,” Moss says. “These are big multi-national corporations that own these mines, not Canadian companies. We’ll be in no different position than we were before.”
However, finding a buyer may be difficult, he said, given the short list of diamond companies that could put in a bid and see the investment as worth their while in the long-term.
Kenyon-Slaney said Rio’s review 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,” he added.
