BHP Billiton is rolling ahead with their exit from the diamond industry after yesterday concluding year long sale negotiations for the Ekati diamond mine in Canada.
The Brisbane Times reports that BHP has sold its 80 per cent stake to Toronto based diamond company Harry Winston for $US500 million ($A479 million).
Australian Mining reported BHP’s move away from the diamond industry in November last year, as the company attempts to refocus efforts on its larger iron ore, petroleum and coal operations.
‘‘The divestment of EKATI is consistent with our focus on large, long-life, low-cost, expandable, upstream assets and together with the recent sale of our interests in Richards Bay Minerals and Yeelirrie, reflects our ongoing pursuit of a simpler business,’’ BHP’s chief of non-ferrous, Andrew Mackenzie, said at the time.
The Ekati mine is expected to have another seven years of supply and has produced more than $750 million worth of rough diamonds, equating to six per cent of the world’s supply by value, the LA Times reported.
The sale remains subject to approval from Canadian regulators and is expected to be finalised before March 2013.
Harry Winston has interest in the full diamond supply chain owning mines, processing facilities and high end jewellery stores which feature regularly in television series like the CW Television Network’s Gossip Girl.
"Completion of this acquisition will bring the opportunity to marry our Canadian diamond sorting and marketing skills with an experienced mine operating and development team, a world class operating asset, and future growth potential. Together with our existing mining business, these assets will serve as our platform for sustained, disciplined growth in the upstream diamond sector," Harry Winston’s CEO Robert Gannicott said.
The company was tipped to be the most likely buyer earlier this year when Gannicott said his company was ‘‘certainly interested’’ in acquisitions as long as the assets were ‘‘well defined’’ and focused on Canada.
Following BHP’s lead, Rio Tinto is also looking to offload its diamond assets.
Australian Mining reported that the company’s strategic review world include looking at potential buyers for its diamond operations.
The company's only diamond project in Australia is the Argyle mine in WA, where the largest ever pink rough diamond was uncovered earlier this year.
Rio also holds controlling interests in the Diavik project in Canada, the Murowa project in Zimbabwe, and the Bunder development in India.
To date, diamonds have not experienced the volatility of other commodities like nickel and uranium, and with a growing middle class in countries like China and India future demand is expected to increase.