Rio Tinto Incurs Loss in Diamond Division

RAPAPORT… Weak rough prices pushed Rio Tinto’s diamond unit into the
red in the first half of the year, the miner reported Thursday.

The division recorded a net loss of $5 million for the six
months ending June 30, compared with a profit of $55 million a year ago. Diamond
sales fell 16% to $271 million for the period.

Production dropped 10% to 8.3 million carats, primarily due
to a 13% decrease in output at the Argyle mine in Australia amid lower ore
grades. Recoveries at the Diavik deposit in Canada fell 1%, as reduced grades outweighed
higher processing volumes. The miner maintained its overall production forecast
of 15 million to 17 million carats for this year.

Rio Tinto holds 100% of Argyle, as well as 60% of Diavik,
which it owns in partnership with Dominion Diamond Mines.

Image: An aerial view of the Diavik mine. (Dominion Diamond Mines)