Rio Tinto announced that it plans on investing $803 million to boost the diamond production at a Western Australian diamond mine in order to meet the demands of the Asian markets. The emerging Indian and Chinese markets have apparently been depleting the company’s existing gemstone resources.
The Argyle diamond mine, a mineral-rich Kimberley region on the west coast of Australia, is the target of this new project. With this massive investment, Rio Tinto is hoping to reach an annual raw diamond production of 9 million tons by 2013.
In a statement released on Tuesday, September 14, the company said that the core of the project involves the construction of a second, underground mine to accompany the existing open pit. Construction is scheduled to be underway within the first six months of 2011, finished within 2 years, and is estimated to extend the life of the mine by a full 8 years.
Rio Tinto had planned to ramp up the mine in 2008, setting aside $1.5 billion for work on the mine, but in 2009 the plans were put on hold due to the financial difficulties the company encountered in the wake of the global financial crisis. Signs of recovering demand have finally created a welcome return of confidence in the diamond industry, allowing the company to go ahead with their investment plans.
“What we have seen, and I suppose one of the reasons behind the announcement today, is that the price of
diamonds has recovered much more quickly than expected,” said Chief Operating Officer, Kevin McLeish.
According to one of Rio Tinto’s spokespeople, the company is seeing a massive increase in diamond demand from China, India where “people are moving into the middle class and increasing consumer spending.”
The Australian Argyle mine is the largest producer of pink diamonds in the world, generating approximately 90% of international supply. The mine is also well known for producing champagne, cognac and high quality white diamonds.
