Rio gets ready to wave its Diavik diamond mine goodbye
Rio Tinto's (ASX, LON:RIO) 60% stake in Canada’s Diavik diamond mine is likely to be the first asset to go in the giant miner’s clean-out of non-core operations as its partner in the mine, Dominion Diamond Corp, said it has the means to buy the controlling stake if the price is right.
According to Reuters, Dominion —formerly Harry Winston Diamond Corp.— is looking into growing its share of the North West Territories diamonds pie by acquiring Rio’s part in the $2.6 billion diamond mine.
The move would follow the Toronto-based company’s announcement last week that it had secured the regulatory approvals required to complete the $500 million acquisition of BHP’s 80% in neighbouring Ekati mine, to close on or about April 10.
De Beers Canada, another major diamond player in Canada’s north, has been ramping up production at Snap Lake Mine, and it is aiming to start production at its fourth proposed diamond mine, Gahcho Kue, in 2015.
Global diamond demand is set to outstrip supply in 2015, when prices, which declined 12.5% in 2012, are expected to increase, according to the Conference Board of Canada.
Bain and Co. has also painted a rosy picture for diamonds. In its report published last December, “The Global Diamond Industry: Portrait of Growth,” it states global diamond demand is expected to grow at 5.9% annually through 2020, while supply is only expected to grow at 2.7% over the same period of time.