Rio Tinto Group (RIO), the world’s second biggest mining company, approved a $350 million project to expand a diamond mine in northwestern Canada, weeks after Chief Executive Officer Sam Walsh flagged an investment.
Construction of the A21 kimberlite pipe at the Diavik mine, 220 kilometers (140 miles) south of the Arctic Circle, will start next year, London-based Rio Tinto said today in a statement. Rio owns 60 percent of the mine, with Dominion Diamond Corp. (DDC) holding the remainder.
The investment comes after Walsh said in an interview this month that there were “seriously good” opportunities in diamonds, a unit that had been put up for sale by former CEO Tom Albanese. Demand globally will probably rise 4 percent to 4.5 percent this year with U.S. consumption increasing as much as 6 percent, according to De Beers, the biggest producer.
“I love diamonds,” Walsh said in an interview on Nov. 10 with Bloomberg Television in Beijing, when he flagged an expansion at its Canadian diamond operation. “I think it’s a seriously good business.”
Production from the pipe is expected to start from late 2018. The expansion will ensure output at Diavik continues at existing levels, Rio Tinto said. The mine’s current production plan has output continuing until 2023, it said.
“Our decision to invest in the Diavik A21 project reflects our strong confidence in the diamond sector and in our ability to compete effectively in the industry,” Alan Davies, chief executive of Rio’s diamonds and minerals unit said today in the statement.
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