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Diversified mining giant Rio Tinto plc (LSE:RIO) will keep its diamond business, the London-based firm in the midst of a divestment programme to strengthen its balance sheet hit by higher cost and falling commodity prices last year, said Monday.
In a statement, Rio Tinto said it decided to retain ownership of one of the largest diamond businesses in the world owing to its robust medium- to long-term demand, especially in Asia and North America.
Rio Tinto’s diamond business encompasses mining from three mines, including the 100% owned Argyle mine in Australia from where 90% of rare pink diamonds in the world, more expensive than white ones, are extracted as well as polishing site in Perth, a sorting and marketing arm in Antwerp, and marketing arms in New York, Hong Kong, and India.
“After considering a number of alternative strategic ownership options it is clear the best path to generate maximum value for our shareholders is to retain these businesses,” Rio Tinto Diamonds & Minerals Chief Executive, Alan Davies, said.
The company, which also mines for aluminium, copper, nickel, coal, gold, iron ore, and other industrial minerals, has launched a divestment programme at the start of the year, following an annual loss in 2012, marked by falling commodity prices and rising cost.
Last June 12th, it announced the sale of its copper-nickel project, dubbed to be the biggest nickel project in the United States in years, as part of its re-allocation of capital. The company was also said to have received bids to acquire its US$3-billion coal business.
“We have valuable, high-quality diamonds businesses that are well positioned to capitalise on the positive market outlook,” Davies added.
In London, shares dropped 47.50 pence, or 1.8%, to £26.26, along with other mining firms as market reacted to Goldman Sachs cut its growth forecast for China, where the bulk of mining firms’ commodities are supplied.
