Rio Tinto says diamonds aren’t forever as it puts arm on sale

City A.M. Reporter
RIO Tinto, the world’s third-largest miner, effectively invited bids for its diamonds business yesterday, joining rival BHP Billiton in backing away from a business that has lost its sparkle.

The company, which runs three mines in Australia, Canada and Africa, said it was reviewing its diamond business and would consider selling it, as it focuses on iron ore, copper and uranium.

Its diamond business is made up of the 100 per cent-owned Argyle mine in Australia, famous for its pink diamonds, as well as 60 per cent-owned Diavik mine in Canada and 78 per cent-owned Murowa mine in Zimbabwe.

Rio mined 11.7m carats of diamonds last year, about a third of the amount dug up by each of the world’s top two producers, Russia’s state-owned Alrosa and De Beers.

The business last year accounted for less than 0.1 per cent of Rio’s net earnings, slumping 86 per cent to just $10m on revenue of $727m.

The assets could come on the market at the same time as BHP Billiton tries to sell its Ekati diamond mine in Canada.

Rio Tinto’s diamonds business could fetch around $2bn, according to industry analysts. Insiders said no sale was imminent.

Ryan Long, a mining analyst at Northland Capital, said the disposal of Rio’s diamond arm would lead to further consolidation within the diamond sector. He added: “Fewer consolidated companies would find it much easier to raise funds.”