Rio Tinto May Sell Off Diamond Mines Individually

Its diamond business is estimated to be worth around $2.2 billion.

“The assets are clearly attractive in their own right,” said Alan Davies, chief executive officer of diamonds and minerals, in comments cited by Bloomberg News.

“It’s a complex business, 12 sites around the world, but it’s a standalone diamond business that’s fully integrated from mine to the market.”

The board will make a final decision on a whole or partial sale based on shareholder value, or a separate listing for the business, Davies said.

Rio’s diamonds operations include a 60-percent stake in Diavik in Canada’s Northwest Territories, 78 percent of the Murowa mine in Zimbabwe, and 100 percent of the Argyle diamond mine in Western Australia.

Diavik is valued at $1.4 billion, Argyle at $551 million and Murowra in Zimbabwe at $279 million, according to Deutsche Bank, Bloomberg reported.

Rio earlier this week officially opened a $2.2 billion underground expansion of the Argyle mine which it said will guarantee mining at the site until at least 2020 and annual production of 20 million carats. Rio’s production in 2012, by comparison, was 3.1 million carats.

Dominion Diamond Corp. (DDC), formerly called Harry Winston Diamond Corp, which owns 40 percent of Rio’s Diavik mine in Canada, is interested in buying the rest of the asset, Chief Executive Officer Robert Gannicott said last month.

Dominion has the right of first refusal on Rio’s 60 percent share of Diavik. Dominion last November acquired BHP Billiton's 80-percent share in the Ekati diamond mine in Canada and its marketing operations for $500 million.