Rio Tinto Diamond Production Down, Revenue Up on Rising Rough Prices
August 26, 08
Diversified mining group Rio Tinto mined a total of 7.853 million carats of diamonds in the first half of 2008, down 31 percent from 11.446 million carats in 2007. Despite the drop in production volume, diamond revenues were up, a result of rising rough diamond prices.
Gross sales revenue from diamonds totaled $571 million, up from $445 million in the previous year period. EBITDA from diamonds was $239 million, while net earnings from the same totaled $108 million, up from $90 million in 2007.
Rio Tinto’s total net earnings were $6.914 billion, a leap of 113 percent over 2007, while underlying EBITDA reached a record total of $11.408 billion, a 73 percent increase.
The group’s earnings from its wholly owned Argyle diamond mine in
Earnings from Diavik, in which Rio Tinto holds a 60 percent interest, were $80 million, $16 million above the first half of 2007, despite production being down 27 percent. “The effect of the stronger Canadian dollar was more than compensated by higher prices and higher sales volumes,” the company said.
Murowa earnings, from its 77.8 percent interest in the
Commenting on the diamond market, Rio Tinto said in its earnings release, “Overall demand for rough diamonds in the first half of 2008 has been strong as demand from emerging markets has balanced declining demand from the
“The demand picture, however, has been divided. Demand for better quality goods has been very strong while demand for lower quality goods has remained weak.”
Mined gold totaled 207,000 ounces, a drop of 57 percent. The price of gold, Rio Tinto noted, averaged $910 per ounce, an increase of 38 percent. “The total impact of price changes on the Copper & Diamonds product group (including gold)…was to increase earnings by $601 million,” the miner stated in a release.