Business / Economy
Zimbabwe diamond mines up for sale
28 Mar 2012 at 05:15hrs | Views
THE Murowa Diamond Mine in Zvishavane could soon be put up for sale as parent company Rio Tinto International has indicated it will exit the diamond business.
The mine, in which Rio Tinto International has a 78 percent stake, is located near Zvishavane in south central Zimbabwe.
The remaining 22 percent is owned by RioZim Limited.
Rio Tinto diamonds and minerals chief executive officer Mr Harry Kenyon-Slaney said the group had a view to divest from the diamonds business and focus instead on other strategic areas.
"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," he said in a statement.
Rio Tinto, the world's third largest miner, runs three mines in Australia, Canada and Africa â€" the 100 percent-owned Argyle Mine in Australia, famous for its pink diamonds, as well as 60 percent-owned Diavik Mine in Canada and the Murowa Mine.
The Murowa Mine is located on three kimberlite pipes, discovered on the mine site in 1997.
Operations at the Murowa Mine began in 2004, after feasibility studies and mine planning conducted between 1998 and 2000. According to initial feasibility studies, the mine's resource has the potential to be expanded to between six and seven times its current production level.
The mine currently employs around 180 people.
The latest operations review by Rio Tinto on Murowa shows that the mine increased its diamond production by 106 percent to 367 000 carats last year from the 178 000 carats produced in 2010.
Ore processed during the last year also rose 23 percent to 473 000 tonnes from 384 000 tonnes in 2010.
Rio Tinto's diamond business mined 11,7 million carats of diamonds last year.
In the statement released yesterday, Rio Tinto said it was reviewing its diamond business and would consider selling it, as it focuses on expanding in more profitable commodities such as iron ore, copper and uranium.
It thus effectively invited bids for its diamonds business, on its books worth US$1,2 billion, and joined rival BHP Billiton in backing away from a business that seems to be increasingly losing its sparkle.
BHP Billiton is currently trying to dispose of its Ekati Diamond Mine in Canada.
Meanwhile, industry analysts have estimated that Rio Tinto's diamond business could fetch around US$2 billion. It could 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.
A dip in diamond prices since July, largely attributable to the eurozone crisis, has negatively affected sentiment towards the sector of late.
More broadly, however, diamond prices increased by 22 percent last year, as measured by the Rapaport Diamond Trade Index.
Analysts contend that the longer-term dynamics for the industry are looking up, with India expected to drive longer-term growth in demand.
The mine, in which Rio Tinto International has a 78 percent stake, is located near Zvishavane in south central Zimbabwe.
The remaining 22 percent is owned by RioZim Limited.
Rio Tinto diamonds and minerals chief executive officer Mr Harry Kenyon-Slaney said the group had a view to divest from the diamonds business and focus instead on other strategic areas.
"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," he said in a statement.
Rio Tinto, the world's third largest miner, runs three mines in Australia, Canada and Africa â€" the 100 percent-owned Argyle Mine in Australia, famous for its pink diamonds, as well as 60 percent-owned Diavik Mine in Canada and the Murowa Mine.
The Murowa Mine is located on three kimberlite pipes, discovered on the mine site in 1997.
Operations at the Murowa Mine began in 2004, after feasibility studies and mine planning conducted between 1998 and 2000. According to initial feasibility studies, the mine's resource has the potential to be expanded to between six and seven times its current production level.
The mine currently employs around 180 people.
Ore processed during the last year also rose 23 percent to 473 000 tonnes from 384 000 tonnes in 2010.
Rio Tinto's diamond business mined 11,7 million carats of diamonds last year.
In the statement released yesterday, Rio Tinto said it was reviewing its diamond business and would consider selling it, as it focuses on expanding in more profitable commodities such as iron ore, copper and uranium.
It thus effectively invited bids for its diamonds business, on its books worth US$1,2 billion, and joined rival BHP Billiton in backing away from a business that seems to be increasingly losing its sparkle.
BHP Billiton is currently trying to dispose of its Ekati Diamond Mine in Canada.
Meanwhile, industry analysts have estimated that Rio Tinto's diamond business could fetch around US$2 billion. It could 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.
A dip in diamond prices since July, largely attributable to the eurozone crisis, has negatively affected sentiment towards the sector of late.
More broadly, however, diamond prices increased by 22 percent last year, as measured by the Rapaport Diamond Trade Index.
Analysts contend that the longer-term dynamics for the industry are looking up, with India expected to drive longer-term growth in demand.
Source - herald
