Rio Tinto flags diamond price surge
by: DOW JONES NEWSWIRES
September 14, 201212:00AM
RIO Tinto has forecast a rise in prices for diamonds over the next decade as demand from China and India continues to soar but says supply remains subdued by a lack of major new discoveries.
The mining company is the third-largest producer of rough diamonds globally after Alrosa and the Anglo American-controlled De Beers, but is seeking to exit the industry.
In a presentation released to the Australian stock exchange, Rio Tinto said it faced no time pressure for a transaction and continued to review all options, including a sale of its diamonds portfolio.
The company said the US was expected to remain a key market for diamond jewellery but would be surpassed in market size by China by 2025. Other markets were expected to move in line with growth in gross domestic product, it said.
Supplies of rough stones, meanwhile, are likely to be flat to declining over the next decade as existing mines become older and deeper.
At the presentation delivered in Montreal, the managing director of Rio Tinto Diamonds, Bruce Cox, said there had been no new "tier 1" diamond discoveries in the past 17 years, and as a result demand-supply imbalances would widen.