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SOMBA K'E/YELLOWKNIFE
Rio Tinto has decided to stay in the diamond business, meaning its share in the Diavik Diamond Mine is no longer for sale.

Diavik Diamond Mine is no longer for sale now that Rio Tinto has decided to stay in the diamond mining business. - NNSL file photo

Just over a year ago, Rio Tinto announced it would be conducting a strategic review of its diamond businesses and put the sale of some projects, such as Diavik, under consideration.

"What it does mean is we've got certainty," said Neils Kristensen, president and chief operating officer for Diavik Diamond Mines Inc. "It has been a difficult period for our people. A period of uncertainty, even for some of our external stakeholders. What (Rio Tinto's decision) does is provide everyone with certainty about the future."

One of the contributing factors to the decision is the improving market outlook for diamonds, according to both Diavik and Rio Tinto.

"The medium to long-term market fundamentals for diamonds remain robust, fuelled by growing demand for luxury goods in Asia and continuing strong demand in North America," states Alan Davis, chief executive for Rio Tinto Diamonds and Minerals in a news release issued June 24. "We have valuable, high quality diamonds businesses that are well positioned to capitalize on the positive market outlook."

"The market fundamentals are strong," Kristensen explained. "China, India are growing markets. The U.S. market is still the biggest part of the diamond market for us and that is improving, even just very recently. That's what the attraction of this industry is at the moment."

Rio Tinto owns 60 per cent of Diavik through its subsidiary Diavik Diamond Mines Inc. and employs more than 1,000 people at the site.

Dominion Diamond Corp., which bought BHP Billiton Ltd.'s 80 per cent stake in Ekati Diamond Mine earlier this year, owns the remaining 40 per cent.

Diavik is expected to be in operation at least until 2020.

Rio Tinto also operates its wholly-owned Argyle diamond mine in Australia, and the Murowa diamond mine in Zimbabwe, of which it owns 78 per cent.

"The good news is (Rio Tinto) has a lot of confidence in the diamonds business going forward," said Kristensen.

"They are confident in the businesses ... particularly Diavik. We are the biggest part of the diamonds business and our business performance has been good."

While the decision means business as usual for Diavik, the company has been working on its own Reshaping Diavik program over the last 12 months. The program ensured operations were made more efficient and sustainable.

"Its a program we've been working on internally and with our suppliers, looking at how we can do things better and smarter," said Kristensen. "It's about setting this business up on a strong footing, on a sustainable footing to ensure we have a strong business for at least another 10-plus years. I think that is recognized by Rio and is certainly part of the reason they have now decided to retain the diamond business and Diavik as part of that business."

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