Merger means diamonds could get squeezed out
Dave Sullivan
Northern News Services
Yellowknife (Jun 04/01) - Diamonds could lose some of their sparkle at the hands of the company emerging from the marriage of mining giants BHP and Billiton Plc.
Last week in Australia, BHP's corporate strategist hinted that NWT's Ekati mine may be put up for sale.
The strategist, Brad Mills, was briefing media on talks between the two companies on what the merged portfolio could look like. He said Ekati was an example of an asset "sitting on the fence."
BHP's Canadian spokesperson, Graham Nichols, plays down the idea, saying Ekati "is not for sale" now but refuses to rule out the possibility for the future.
BHP now owns 51 per cent of the Northern mine, and will own 80 per cent if a $687-million bid for the shares held by partner Dia Met Minerals is successful.
Unlike other commodities, diamonds will become a smaller and less important part of the merged company, as Billiton, a London-based company with a payroll of 30,000 employees, doesn't bring any diamond assets to the merger table.
"BHP Billiton will have a number of very large mineral businesses. Copper, iron ore, coal, aluminum as examples. Diamonds aren't nearly as large as those," Nichols says.
"To be an important component in the long term, diamonds should get bigger. If (diamonds) didn't become bigger over time, BHP might wish to sell it and realize the gains and move on to other core businesses."
BHP Billiton set aggressive growth targets, and is comparing the diamonds with other minerals in the expanded corporate stable.
BHP has been working on expanding its diamond business by exploring for more of the precious stones and starting a value-added marketing campaign.
Ekati "is still a very sound asset but is it growing. Are there opportunities for somebody else to take over and do something bigger and better with it than BHP? Because BHP isn't really a diamond company," Nichols said.
"Maybe BHP isn't as well positioned as other companies to realize that growth."
