BHP boss hints at complete exit from diamonds
BHP Billiton may shelve diamond mining for at least two decades to concentrate on larger aspects of its business, CEO Marius Kloppers said today.
“Once you decide to exit a specific sector you’re probably not going to enter that for a couple of decades,” Kloppers said during a conference call. “We’ve made that choice in titanium and we’re inching closer to that choice in diamonds.”
Last week, BHP announced it is selling its 37% non-operated interest in South African mineral sands venture Richards Bay Minerals to partner Rio Tinto PLC (LON:RIO) – effectively exiting the titanium minerals industry.
In November, the world’s largest miner launched a review of its diamond operations with an eye to selling assets including Ekati, Canada’s oldest diamond mine. BHP owns 80% of the mine in the Canadian Northwest Territories first discovered in the early '90s by now-famous geologists Chuck Fipke and Stewart Blusson, who each retained a 10% stake. BHP owned half of the Chidliak diamond exploration property on Baffin Island, but sold its 51% stake in December to Peregrine Diamonds.
Bloomberg reported Kloppers saying that the Ekati mine, which has been valued at between $300 million and $500 million because of its limited remaining life and declining earnings, will be run until it runs out of ore, unless a buyer can be found:
“As we invest more in our bigger assets, the minimum threshold for both an industry and an asset in terms of scale gets moved up,” he said. “We then make choices on industries.”
BHP accounted for 7.5% of world diamond production in 2010, according to Bloomberg.