Rio Tinto will keep diamond business

World’s second-largest miner abandons plans.

New Statesman
A rare pink diamond extracted by Rio Tinto. Credit: Getty Images.

The Anglo-Australian metals and mining group Rio Tinto has decided to retain its diamond business following the conclusion of a strategic review, during which the firm considered several options, including sale of the unit.

Alan Davies, CEO of Rio Tinto Diamonds & Minerals, said: “We have valuable, high-quality diamond 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.”

The company, which also decided not to pursue an initial public offering of the business, had been considering to sell its assets since March last year due to a fall in demand and economic slowdown across global markets.

“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,” added Davies.

Rio Tinto, a founding member of Responsible Jewellery Council, operates a fully integrated diamonds business right from exploration to sales and marketing. It  holds  100 per cent stake in Argyle mine, Australia; 60 per cent interest in Diavik mine, Canada; and a 78 per cent stake in Murowa mine, Zimbabwe.

Apart from operating a diamond cutting and polishing factory in Perth, Australia, the company also has an advanced diamond project in India.

Rio Tinto’s share of the production from its three operating diamond mines is sold through  its sales and marketing headquarters in Antwerp, Belgium, and is supported by offices in Mumbai, Hong Kong and New York.

Earlier this month, the company signed an agreement with the Canada-based Lundin Mining to sell its Eagle project in Michigan's Upper Peninsula.

Last year, Rio Tinto’s diamond business posted a loss of $43m compared to a profit of $10m a year earlier.

Meanwhile, Rio Tinto shares declined by 1.6 per cent to A$51.80 in early trading.