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No Time Pressure on Rio Tinto Diamond Review
Sep 13, 2012 2:44 AM
By Dilipp S Nag
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RAPAPORT... Rio Tinto said it’s under no time constraints to decide on the future of its diamond business, stressing that it will review all of its options, including a possible divestment from the industry.
The company announced in March that it is considering selling its diamond portfolio, which includes the Argyle mine in Australia, a 60 percent stake in the Diavik mine in Canada, a 78 percent share of the Murowa mine in Zimbabwe and the Bunder development project in India.
Bruce Cox, the managing director of Rio Tinto Diamonds, said in a presentation in Montreal on Wednesday that production from these combined assets are expected to account for 22 percent of global diamond production by 2017, up from 10 percent currently.
Cox forecast that global diamond supply is expected to be flat, or even decline, over the next decade, widening the demand-supply imbalance. He noted there have been no new tier-1 diamond discoveries during the past 17 years while the existing mines are becoming older and deeper.
He explained that Rio Tinto is well positioned for significant growth as it increases supply at Argyle and Diavik via underground mining at the two mines. The Bunder project is also an important source of future supply, he added.
Cox expects that strong industry fundamentals will drive diamond prices higher over the next decade. He noted that emerging markets, mainly China and India, are expected to drive strong demand growth and account for up to 40 percent of the diamond jewelry market by 2020. The U.S. is expected to remain a key market for diamond jewelry, but China is likely to surpass the size of the U.S. market by 2025, Cox added.
Rio Tinto’s diamond production fell 15 percent to 11.7 million carats in 2011, while diamond revenue rose 7 percent to $727 million.
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Tags:
Argyle, Bruce Cox, Bunder, diamond, diamonds, Diavik, Dilipp S Nag, India, mines, Murowa, Rapaport, Rio Tinto, rough, supply
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