Rio Tinto: Divestment from Diamonds Best Route to Optimize Value

(IDEX Online News) – Divesting from its diamond business could be the best route to optimize value for Rio Tinto’s shareholders, according to chairman Jan Du Plessis. The backdrop to this move is not lack of belief in the future of diamonds, but rather a matter of scale.

Speaking at the annual general meeting in Brisbane, Australia today, Du Plessis said the fundamentals of the company’s diamond business are very sound, with demand growing strongly and lack of discoveries limiting supply. The diamond sector, however, has become less relevant in terms of scale, as other parts of Rio Tinto have grown much larger.

CEO Tom Albanese, said diamond prices were strong in the first half of 2011, but weaker in the second half. “The longer-term outlook remains strong, with limited supply of new diamonds and rising demand growth in China and India,” he said.

Speaking about the possible exit from the diamond sector, Albanese said, “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.”