DDC Asks for Diavik Rough

December 10, 2003

DDC Asks for Diavik Rough

Diamond Dealers Club executives in New York City met on Dec. 9 with executives from Rio Tinto, majority owner of the Diavik diamond mine in Canada, to make a bid for some of Diavik's rough to be cut in New York City. Rough sales at the Diavik mine take place in Antwerp, says Keith Johnson, Rio Tinto's group executive, diamonds. But the group has no geographic preference as to where the diamonds are cut, he says. Rio Tinto's criteria for developing relationships with new customers include finding companies of demonstrable financial strength that can add value to a product. "We are interested in developing relationships for the long-haul," he says.

When Canada's Diavik diamond mine is in full production in 2004, Rio Tinto executives say its slice of world diamond rough production will be near 10% (by value), estimated to be more than 40 million carats annually. "The fully commissioned Diavik mine will increase our range of goods tremendously in both volume and value," says Johnson. "This will create fantastic opportunities."

DDC members stress that, as the largest market in the world for polished diamonds, it would make sense for Rio Tinto to support the U.S. cutting industry. "We are looking for a strong business relationship," says DDC President Jacob Banda. Other DDC members suggested Rio Tinto hold a diamond tender in New Yor City or even open an office there.

"Time will tell; at present we do not have that many New York customers," Johnson says. "Much will depend on the success our New York customers are able to achieve."

Rio Tinto, long known for mining copper, coal, aluminum and other metals, is beginning to take diamonds seriously. Nine months ago it developed a diamond division, naming Johnson as its first group executive. It also continues to make inroads in developing new diamond sources. Johnson pointed to a new Murowa mine project in Zimbabwe. "We are hopeful and are working on it. As yet it is hard to develop strategies in Zimbabwe" because of political instability, he says. The mine appears to hold great promise for big, clean diamonds. "It is equivalent to Diavik's top end but without Diavik's bottom end," he says.

by Robert Weldon, G.G.

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