Mining giant Rio Tinto Ltd (ASX: RIO) unveiled on Tuesday its $US803 million plan to upgrade the current open pit operations of the company's Argyle diamond mine site in Western Australia into an underground exploration.

The company said that planned development in the mining site should be completed by 2013 and would extend the mine's operation up to 2019, which is widely regarded as the world's biggest diamond mining site in terms of volume and currently produces and meets much of the global demand for pink diamond.

Rio Tinto diamonds and minerals head Harry Kenyon-Slaney said that the planned construction of an underground mine, which was originally planned in 2005 but shelved when diamond prices dipped at the height of the worldwide economic downturn, was a testament of the company's strong commitment to the global diamond industry.

Mr Kenyon-Slaney also noted that the investment was being implemented amidst the diamond market's continued recovery, which was marked by the industry's sustained establishment of sound fundamentals in the previous financial periods.

Rio Tinto said that Argyle has already produce a total of 760 million carats since it commenced operations in 1985, adding that the outlook for diamond has been encouraging as the company reported that "a significant supply gap is expected to emerge in the medium to long term and the outlook for demand is strong, driven by the growth of emerging markets."

Mr Kenyon-Slaney expressed confidence that Argyle currently enjoys sufficient strength and readiness in securing the anticipated upsurge in diamond demand.