Rio Tinto Pushes Thru with Diamond Mine Divestment

Despite posting a favourable revenue performance from its diamond business, global mining giant Rio Tinto Group is still resolute to sell off its assets from that particular business arm.

The world's third-largest mining company on Wednesday announced revenue from its diamond business jumped 12 per cent to $350 million in the first half of 2012 compared from a year ago, spurred by ‎higher production even as demand faced a modest slowdown during the period.

Moreover, the company said its long term outlook on its diamond business remains strong, as it targets to churn out 14.6 million carats of diamond rough by end 2012.

Still, the plan to divest its diamond interests, first announced in March, is "well advanced" as it continues to look and ponder "at multiple options" for its diamonds division, Chief Financial Officer Guy Elliott told reporters yesterday on a conference call from London.

Although no confirmation or pronouncements were made on bids from other mining operator, Mr Elliott stressed, however, that while the company wants to sell off the diamond business, it will not also be rushed.

"The diamonds sector looks interesting and healthy certainly as you look into the medium- and longer-term, in view of the low levels of supply and continuing strong demand," he said.

Diamond production for the first six months of 2012 jumped 18 per cent ‎to 6.167 million carats across its three diamond mines, the Argyle mine in ‎Australia, the Diavik mine in Canada, and the ‎Murowa mine in Zimbabwe, where Rio Tinto controls at 100 per cent, 60 per cent and 77.8 per cent, respectively.

A gem producer and jewelry retailer in Canada, the Harry Winston Diamond Corp., had expressed in June that it is interested in the Diavik stake.

Harry Winston Diamond Corp. holds 40 per cent of Diavik, with a right of first refusal to the 60 per cent share of Rio Tinto.

Despite divestment plans, the company's capital expenditure on its diamond business jumped 69 ‎per cent to $273 million during the first six months, as it continued with construction of the Argyle underground mine. It is expected to go online in the first half of 2013.