Tuesday, March 27, 2012

Big miners backing away from Canadian diamonds


Rio Tinto PLC (RIO-T4.660.102.19%) today followed its rival BHP Billiton Ltd. (BHP-N71.48-1.13-1.56%) in saying it is reviewing its diamond operations, which include a 60-per-cent stake in Canada's Diavik mine, as well as projects in Australia and Zimbabwe, exploring options for "potential divestment."

"The diamonds market outlook is very positive, with demand growing strongly and lack of new discoveries limiting supply," Harry Kenyon-Slaney, who heads the company's diamonds and minerals group, said in a statement.

"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."

BHP, which owns 80 per cent of the Ekati project, Canada's first diamond mine, said it could abandon the business in Canada. BHP's sales from Ekati represent some 10 per cent of global supply, but it's a small part of the country's overall operations.

In a world that spurns "blood diamonds," Canada's are certified as conflict free, and the country has gained a name in the global business.

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