Rio’s Zimbabwe spin-off to acquire Murowa diamond mine
Zimbabwean miner RioZim Limited is negotiating with global giant Rio Tinto (LON & NYSE:RIO) in an attempt to acquire the now jointly own Murowa diamond mine in the in south central region of the country, reports Reuters Africa.
The world’s third largest miner announced in March that it was reviewing its diamond business, potentially selling it all off.
According to some analysts, the diamond business seems to be "simply too small" for mining giants such as Rio Tinto, which diamond mines contribute less than 2% to its earnings.
Rio owns 78% of Murowa, which produced 324,000 carats in the last financial year, while RioZim controls the outstanding 22% of the mine.
The African company move came as a surprise for the market as RioZim is facing some financial hassles. On Monday, the company postponed its annual general meeting scheduled for May 22 to an unspecified date, saying it needed to finalize its annual report and do “possible adjustments” due the changes it went through in its bid to recapitalize its operations.
However, Zimbabwe Independent reports the postponement had nothing to do with the reason given by RioZim, but more to do with the figures over the external liability, which the auditors had refused to sign for.
Well-placed sources also said as the losses at the mining company continued to mount, workers were receiving salaries irregularly. Market commentators have questioned the ability of the recapitalisation partners to fund the revival of the company, given that only a small percentage of funding has been released to pay off the company’s debts, which were in excess of US$50 million as at the end of December 2011.
Rio Tinto operates three diamond mines including Argyle in Australia, Diavik in Canada's far north and Murowa in Zimbabwe. The miner also has an advanced diamond project in Bunder, India.
RioZim also mines coal, gold and nickel.