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Diamonds lose their sparkle for Rio Tinto


Diamonds lose their sparkle for Rio Tinto


Rio Tinto, the world’s third-largest miner, has signaled it wants out of the diamond business.

Rio Tinto, which runs three gem mines in Australia, Canada and Zimbabwe, said it was reviewing its diamond interests and would consider selling them to focus on expanding in more profitable commodities such as iron ore, copper and uranium.

Rival BHP Billiton also decided to sell its diamond mines last year.

“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,” Rio Tinto’s diamonds and minerals CEO Harry Kenyon-Slaney said in a statement.

One analyst said Rio Tinto’s diamonds business could fetch around 2.5 billion euros.

It may attract the same bidders in the running for BHP’s Ekati diamond mine stake, including private equity firm KKR and luxury jeweller Harry Winston, which already has a 40 percent stake in Rio’s Diavik mine in Canada.

A drop in diamond prices since July, knocked by Europe’s downturn, has hit sentiment towards the sector, but the longer-term dynamics for the industry are looking up, with India and China expected to drive longer-term growth in demand.

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