Rio Tinto Diamond Revenue Declines

RIO Tinto yesterday reported that revenues from its diamond operations fell 68% to US$184 million in the six months ending June 30, 2009.

The company noted that prices and sales volumes for diamonds were severely impacted by the global economic downturn.
“The effect on the rough diamonds market has been exacerbated by the lowering of inventory levels in the diamond pipeline, resulting from reduced global liquidity,” Rio Tinto said.
As a result, the diamond unit posted a net loss of US$56 million, compared with profits of  US$108 million a year ago.
Earnings before interest, tax, depreciation and amortization (EBITDA) fell to negative US$6 million, from US$239 million in 2008.
Production across the company’s three diamond operations fell 14% to 6 787 million carats during the half year.
Rio Tinto has full ownership of the Argyle mine in Australia, a 60% stake in the Diavik mine in Canada, and 77,8% of the Murowa mine in Zimbabwe. It did not provide separate data for each mine in the group’s half year report.
Rio Tinto cut its capital expenditure on the diamond assets 57% to $157 million during the period. The assets were valued at $1,55 billion at June 30, compared with $1,34 billion at the start of the period.
Rio Tinto’s full group net earnings fell 65% to $US2,5 billion with revenues down 35% to US$19,5 billion. Group chairman Jan du Plessis stressed that Rio Tinto remains cautious about the recent rally in commodity prices. “The expectation that development in emerging markets will generate underlying strength in metals and minerals demand over the long term remains broadly unchanged,” he added. –– Staff writer.