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Losses Deepen at Rio Tinto’s Diamond Unit
Jul 29, 2020 6:06 AM
By Rapaport News
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RAPAPORT... Weak rough demand and a devaluation of assets pushed Rio Tinto’s diamond division further into the red in the first half of the year, the miner reported Wednesday.
The unit recorded a net loss of $40 million for the six months ending June 30, compared with a loss of $5 million a year ago. Diamond sales fell 48% to $141 million for the period.
“The Covid-19 pandemic has significantly disrupted the global demand for diamonds, with many countries restricting the movement of citizens and closing retail outlets,” the miner noted.
Rio Tinto also paid an impairment charge of $292 million on its Diavik mine in Canada. The asset’s devaluation was caused by Dominion Diamond Mines, its 40% partner in Diavik, filing for creditor protection in April, and subsequently defaulting on its share of payments for the deposit, Rio Tinto said. Additionally, the income the miner will get from the remaining life of Diavik, which is due to close in 2025, does not support the value of the mine’s property and assets, it added.
Production dropped 7% to 7.7 million carats, primarily due to a 17% decrease in output at Diavik amid reduced processing of ore and lower grades. Recoveries at the Argyle mine in Australia fell 4% as decreased grades outweighed higher process volumes. The company is still on track to close Argyle at the end of the year, it said. Rio Tinto maintained its overall production forecast of 12 million to 14 million carats for 2020.
Rio Tinto owns 100% of Argyle and 60% of Diavik.
Image: The Diavik mine. (The Diavik Diamond Mine)
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Tags:
Argyle, Argyle mine, COVID-19, Diavik, Diavik mine, Dominion Diamond Mines, Rapaport News, Rio Tinto
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