RAPAPORT... Rio Tinto reported that its diamond sales rose 7 percent year on year to $727 million in 2011. The increase came as rough prices improved 24 percent during the year despite some softening towards the end of the year, thus compensating for the decline in Rio Tinto’s annual production.
Rio Tinto explained that rough prices improved strongly in the first eight months of 2011 due to restocking in the U.S. and continued growth in Chinese and Indian consumer markets.
The company earlier reported that its diamond production fell 15 percent to 11.7 million carats in 2011. Rio Tinto owns the Argyle mine in Australia, 60 percent of the Diavik mine in Canada and 78 percent of Zimbabwe’s Murowa mine. Argyle’s output fell 24 percent due to heavy rains in the first quarter, lower ore grades and maintenance shut down at the mine. The other two operations registered production growth during the year.
Net earnings at the combined diamond operations slumped 86 percent to $10 million as the company’s capital expenditure jumped 139 percent to $445 million and depreciation and amortization of its diamond assets more than doubled to $146 million.
Group sales rose 10 percent to $60.54 billion but net earnings fell 59 percent to $5.83 billion.