Rio Tinto Posts Jump in Diamond Revenues in H1

(IDEX Online News) – Mining giant Rio Tinto said revenues from its diamond operations in the first half of this year totaled $403 million compared with $350 million a year earlier.

The miner posted a net profit of $5 million from its diamond business in the first six months of this year compared with a ‎loss of $24 million in the same period last year.  

Meanwhile, earnings before interest, tax, depreciation and amortization (EBITDA) soared to $95 million from $35 million last year. ‎

"Average prices declined for nearly all of Rio Tinto’s major commodities, with the exception of diamonds," the firm said in its financial report. "Diamond production increased 20 per cent compared with 2012 first half, mainly reflecting increased tonnes processed and higher grades at Argyle following the commissioning of the underground mine in April 2013. Diavik has completed the transition to a fully underground mine, with all three pipes now at full production."

Rio Tinto reported that capital expenditure on its diamond division dropped to $184 million during the period from $273 million a year before. The firm officially began underground mine operations at its fully owned at Argyle mine in Western Australia in earlier this year. ‎

In addition to the Argyle mine, Rio Tinto's diamond operations include a 60-percent share of the Diavik mine in Canada, and 78 percent of the ‎Murowa mine in Zimbabwe.

Diamond production in the first half of this year came to 7.37 million carats compared with 6.17 million carats last year.

"Rough diamond prices rose in the first half of 2013," Rio Tinto commented. "Demand for commercial quality goods remained steady but higher quality demand was slow. The near-term outlook points to a softening rough market with manufacturing margins under pressure from a weaker Indian rupee and tighter bank lending."

Referring to its decision earlier this year to retain its diamond businesses, the miner said: "As always, any decision to sell is driven by value. For this reason, we have decided to retain our diamonds businesses, which are high-quality assets."

The miner said 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. The high-quality diamonds business is well positioned to capitalise on the positive market outlook."