Luxury diamond retailer Harry Winston Diamond Corporation has announced it will be reverting to its roots as a mining company.
The Toronto based corporation said that Swiss watch company Swatch will buy its jewellery business for US$750 million plus up to US$250 million in debt, the Wall Street Journal reported.
Offloading this arm of the business will allow Harry Winston to focus on its mining business under the new name of Dominion Diamond Corporation.
Australian Mining reported last year that BHP sold its 80 per cent stake in the Canadian Ekati diamond mine to Harry Winston for $US500 million ($A479 million), in an effort to move away from the diamond industry and attempt 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.
Rio has also expressed interest in selling its diamond assets which include its Canadian Diavik stake, the Murowa project in Zimbabwe, the Bunder development in India, and Western Australia’s Argyle mine where the largest ever pink rough diamond was uncovered earlier last year.
Diverging the retail arm means Harry Winston is now cashed up for future purchases, and a deal to buy Rio Tinto’s 60 per cent stake in the Diavik mine is “an obvious one for us to look at as long as the price is right,” CEO Robert Gannicott told Bloomberg.
Discussing BHP and Rio Tinto’s plans to sell off their various mining businesses, Harry Winston said in their annual report that the diamond game is one for specialists.
“We now see the world’s two largest mining companies both seeking to divest their diamond businesses in the realization that they are not of the scale of their bulk commodity businesses. Diamonds as a product are too complex to be treated as a commodity. It is a business for specialists with expertise in diamond mining, processing and marketing or combinations of those elements. Harry Winston is one of those specialists.”
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.
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.