Rio Tinto mulls $100 mn in exploration project

Rio Tinto mulls $100 mn in exploration project

Mumbai: UK-based diamond producer Rio Tinto Diamonds plans to invest $75-100 million on a pre-feasibility study of its diamond mines project in Madhya Pradesh, a top company official said.

“We plan to start a pre-feasibility study at the Bunder Diamond project in Madhya Pradesh and invest $75-100 million by early 2010," Rio Tinto diamonds managing director Bruce Cox said.

If the study shows that the project is viable, then the company would consider further investments, Cox said.“We could then invest a further USD 300-400 million over the next 4-5-years," he said.

The company is currently working for prospecting and mining licences with several Indian states, Cox said.

The most advanced exploration project is at Bunder in Madhya Pradesh where Rio Tinto has discovered a cluster of eight diamondiferous lamproites. Rio Tinto has spent more than $25 million over the last five-years on diamond exploration in India and is the first foreign company to be granted prospecting licences.

The reconnaissance work has resulted in the discovery of more than 15 pipes with Rio Tinto’s Bunder project, the first of its kind in India, and set to be a world-class diamond mine.

“We would be delighted to be mining and marketing Indian diamonds in the not-too-distant future," Cox said.

"The world is also looking to India as a driver of future growth in the diamond industry, be that through their highly innovative and flexible manufacturing sector, or as an end consumer of diamonds,“ Rio Tinto general manager for sales and marketing Jean-Marc Lieberherr said.

“We will continue to work collaboratively with our partners and the industry, including the Gem and Jewelery Export Promotion Council to create demand for diamonds throughout the distribution pipeline," Lieberherr said.

Long-term diamond fundamentals suggest at the aggregate level, diamond demand will exceed supply resulting in a robust price outlook, he said.

Rio Tinto is one of the world’s major diamond producers through its 100% control of the Argyle mine in Australia, 60% of the Diavik mine in Canada and a 78% interest in the Murowa mine in Africa.

More than 90% of the Argyle production is cut and processed in India while more than 60% from its Diavik mine is cut and polished in India.

Rio Tinto is also celebrating 20-years of diamond business in India this year. It had opened its office in Mumbai in 1989 in recognition of the growing importance of India as a major trading partner and diamond cutting centre.