After a careful and thorough scrutiny of various available
options, mining giant,
Rio Tinto plc
) has finally opted to retain its diamonds business. Rio took
roughly fifteen months, beginning March last year, to come to the
Management believes that the diamond business has an enormous
growth potential, with the increasing demand in Asia and North
America. It is now expected that retaining the business at this
point will enable Rio to enhance shareholders value.
The diamonds business of the company includes the 100%-owned
Argyle (Australia-based), 60%-owned Diavik (Canada-based) and
78%-owned Murowa (Zimbabwe-based) diamond mines. The option to
divest the business was seen as a step to reduce its costs as
well as its huge long-term debts.
Over the past fifteen months, Rio has expanded its diamonds
business splendidly. Last month, Rio Tinto Diamonds launched a
new and innovative sales platform for its Canadian Diavik
production. Rio will use a proprietary auction system to sell its
diamonds together with the Supply Agreements. During the same
time, the Argyle Diamond Mine produced three of the rare Fancy
Red diamonds, for the first time in the history of the mine.
At this juncture, both the metal and mining industries are
going through a difficult phase. As a result, not only Rio but
other miners, such as Australia-based
BHP Billiton Limited
) and Brazil-based
), are also attempting to shorten their portfolio to concentrate
more on the profitable ones. While some have found success
in divesting some of their assets, others have shelved their
plans, not realizing the full worth of the assets.
Apart from the diamonds business, Rio has also been attempting
to shorten its non-profitable asset portfolio, with the sale of
Eagle project in Jun 2013 and Sebree Smelter in Apr 2013. Rio
currently carries a Zacks Rank #5 (Strong Sell). However, another
Golden Minerals Company
) carries a Zacks Rank #2 (Buy), and is worth a look.
GOLDEN MINERALS (AUMN): Free Stock Analysis
BHP BILLITN LTD (BHP): Free Stock Analysis
RIO TINTO-ADR (RIO): Free Stock Analysis
VALE SA (VALE): Free Stock Analysis Report
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