Rio - Diamond Tender

Plenty of upside in the Diamond market.  Hope MED can get a good price for Diamonds in this auction to fund the continued exploration to find new pipes and coloured stones?  Price can only go higher.

For years, Rio Tinto’s diamond division has been the largely unloved and unwanted baby inside a global portfolio dominated by iron ore, aluminium and copper.
But the business has found a new champion in chief executive Jean-Sebastien Jacques, who has emerged as a strong supporter for the division since taking charge of Rio Tinto just over 18 months ago.
Yesterday, surrounded by the latest multi-million-dollar tender of showcase diamonds from its Argyle mine in Western Australia’s Kimberley, Mr Jacques reiterated his belief that the diamonds arm still had a future within Rio.
He told The Australian he was “absolutely” proud to have Argyle within the company’s portfolio. “We’ve been in there for a long, long time; it’s a high-margin business,” he said.
Mr Jacques has previously flagged his hopes of growing the diamond division but, with few diamond mines available and premium prices making acquisitions difficult, Rio has turned to exploration to secure a future beyond the forecast mine lives for Argyle and the Diavik mine in northern Canada.
“Nowadays especially it’s very difficult to find diamonds like these ones,” he said. “On average, from the time you think there is a good property to the time you get to diamonds it’s 30 years, so the exploration people have been under pressure for a long time. It’s an exploration game for us.”
Rio Tinto’s diamond division generated first-half net earnings of $US19 million ($23.8m) out of total net earnings across the group of $US3.3bn.
A successful tender of the 58 gems that make up this year’s collection of showcase pink diamonds will have a major weighting on the diamond division’s profitability.
Mr Jacques was particularly tight-lipped about the likely value of this year’s tender, but pink and red diamonds have previously sold for as much as $US2.4m a carat. Such an outcome this year would suggest the stones — which together weigh less than 10 grams — could fetch as much as $US100m in total.
There will be particularly high hopes that the 2.11-carat “fancy red” stone dubbed the Argyle Everglow will be able to break the world record $US5m paid for a 2.09 carat fancy red in Hong Kong in 2014.