Prospecting the Exit Trail

In what came as a third strike to the confidence of the diamond community, Rio Tinto announced on March 27, 2012 that it had begun a “strategic review” of its diamond business to explore “a range of options for potential divestment of its diamond interests”. This follows on the heels of a similar declaration by BHP Billiton in November, 2011 and the subsequent sale of its 51 percent stake in the Chidliak diamond exploration project, while it is still scouring the horizon for a prospective buyer for the Ekati Mine, Diamond World reported in its Weekly E-Post. The third angle to this particular story, of course, is the sale-in-process of the Oppenheimer stake in De Beers. In one fell swoop, three big mining owners “divesting” their “interests”.
Interestingly, both BHP and Rio use almost identical words to explain their move. The imperative arising out of the need to pursue a strategy of “operating large, long-life, expandable assets”. All parties, however, strenuously stated that the diamond market outlook remains very positive. A reiteration which may or may not give the rest of the diamond community cause for comfort; particularly as the mining end of the pipeline is considered to be the most profitable.
While it is yet early days, the rumbles of concern are beginning to reverberate within the industry, mainly in the manufacturing centres, which have long been feeling the profitability pinch. Whatever actually happens, one thing is sure – the diamond industry will certainly see some changes in the coming years.