Fin24

Rio mulls selling diamond businesses

2012-03-27 08:01

Sydney - Mining giant Rio Tinto said on Tuesday it was considering selling its diamond interests, which include operations in Canada, Australia and Zimbabwe.

The company, one of the world's major diamond producers, said in a statement it had begun a strategic review that included potential divestment options.

"The diamonds market outlook is very positive, with demand growing strongly and lack of new discoveries limiting supply," said Harry Kenyon-Slaney, chief executive of diamonds and minerals.

"We have a valuable, high quality diamonds business, but given its scale we are reviewing whether we can create more value through a different ownership structure... This process may take some time.

"We're committed to keeping stakeholders informed about any key developments, and in the meantime are reassuring employees and the governments in the states and countries where we operate that it is very much business as usual."

The move follows BHP Billiton [JSE:BIL] last November announcing it too was reviewing its diamond business.

Earnings for both companies have in recent years been led by their iron ore operations.

Rio operates three diamond mines: Argyle in Australia (100% interest), Diavik in Canada (60% interest), and Murowa in Zimbabwe (78% interest).

It also wholly owns Bunder, a diamonds project in India.

The biggest pink diamond ever found in Australia was unearthed at Argyle last month - a 12.76 carat stone that broke records in the resource-rich nation.