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Rio Tinto to keep Murowa Diamond Mine
24/06/2013 00:00:00
by Business Reporter
 
 
RELATED STORIES

GLOBAL resources group Rio Tinto is set to retain its interest in Murowa Diamond Mine after the company reversed a decision to dispose of its diamond business.

The world’s number three miner said Monday it was calling off the proposed US$1.3bln sale of its diamond operations in operations in Australia, Canada and Zimbabwe after buyers failed to meet its asking price.

Rio Tinto has a 78 percent interest in Zvishavane based Murowa diamond with the balance owned by the locally listed RioZim Limited.

"After considering a number of alternative strategic ownership options it is clear the best path to generate maximum value for our shareholders is to retain these businesses," said Rio Diamonds and Minerals chief executive Alan Davies in a statement on Monday.

"The medium-to-long-term market fundamentals for diamonds remain robust, fuelled by growing demand for luxury goods in Asia and continuing strong demand in North America.”

Rio Tinto put its gem business up for sale in March last year after following a sharp fall in prices amid concerns about the eurozone crises crimping demand. The diamond unit reported a $43 million loss in 2012, down from a profit of $10 million a year earlier.

Following the announcement last year RioZim had indicated its interest in taking over majority control of the Zimbabwe unit.

"We're now in discussions with Rio Tinto Plc to acquire the 78 percent of Murowa that they want to offload," said Harpal Randhawa, whose private equity group Global Emerging Markets (GEM) recently bought 25 percent of RioZim.

Murowa has since agreed a deal with the government for compliance with indigenisation laws which require foreign firms to transfer control and ownership of at least 51 percent of their local operations to Zimbabweans.



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