By Bernardette Sto. Domingo
Australian diamond miner Rio Tinto is looking at a bright future with plans to further strengthen existing operations and embark on exploration projects.
Rio Tinto Vice President of Sales and Marketing, Copper & Diamonds Alan Chirgwin sat down with JNA to talk about the company’s business strategies and growth outlook.
Could you share with us Rio Tinto’s growth strategies moving forward after a series of successful diamond tenders?
Alan Chirgwin: We are currently running two world-class underground diamond mines in Australia and Canada. Our focus is on ensuring a strong return on these investments by running our operations very cost-effectively and returning cash to Rio Tinto. We have also invested in the development of the fourth pipe at our Diavik mine in Canada and we are looking to the future with continued exploration.
The diamond tenders are part of our business as usual – in fact, last year was the 34th annual Argyle Pink Diamonds Tender. Over the past three decades, this format has not changed – we feature around 55 to 60 of the finest polished pink diamonds produced from the Argyle mine in Australia.
Market response to our diamond tenders has always been very encouraging. In the case of the Argyle Pink Diamonds Tender, there is strong appreciation of the rarity of pink diamonds and the realisation that the world will not be producing these diamonds for much longer.
In relation to the Diavik Stars of the Arctic, these diamonds headlined our Specials Tender as they were three of the finest large rough diamonds from the Diavik diamond mine, showcasing a rare combination of size, quality and colour. Again, market interest was keen given the uniqueness of the offering. Rarity and exceptionality drive demand and strong value appreciation.
What are your plans after the Argyle mine closes? How would this affect Rio Tinto’s diamond production?
Chirgwin: We advised the market in March last year that we have reserves for Argyle to produce diamonds economically through to 2020 with opportunities to increase the reserves and extend the operational life subject to technical and financial performance. Once Argyle has exhausted its economically viable diamond reserves, Rio Tinto will close the mine.
Could you provide an update on exploration projects that you are undertaking especially with the closing of Argyle?
Chirgwin: Rio Tinto remains active in this arena with around 20 percent of our exploration budget allocated for diamond exploration. Our focus is currently on Canada where we believe there is highest prospect for a world-class ore body. We currently have optionality in Star Diamond Corporation’s project located in the Fort à la Corne forest in central Saskatchewan.
What is your growth outlook in 2019 and beyond for the diamond industry?
Chirgwin: We see strong market fundamentals for diamonds driven by a dearth of new supply projects and robust demand from established and emerging markets. Diamonds are an attractive business to be in.
Are there plans to acquire companies or expand your presence in other countries to augment production?
Chirgwin: We will only proceed with growth projects that yield superior returns. Any new project will be assessed on its own merits and they will need to demonstrate that they are the best use of cash delivering the highest risk adjusted returns.
The blockchain system and traceability initiatives are taking precedence in the gem and jewellery industry. Is Rio Tinto doing something along this line?
Chirgwin: Blockchain is a high-tech solution and a potential game changer in strengthening global governance in the diamond and jewellery supply chain. Supply chain transparency has always been part of Rio Tinto Diamonds’ DNA and for this reason, we maintain a close watch on its applications in the diamond and diamond jewellery industry.