Why Is Rio Tinto Literally Giving Away A Diamond Mine? by Dave Forest
It’s not often that quality mining assets come up for sale. And it’s even rarer they’re given away for free.
But news this week suggests that’s exactly what’s happening in one of the world’s emerging diamond hotspots.
India.
Rio Tinto
Indian government officials said Tuesday that Rio Tinto is about to make an unprecedented move with its Bunder diamond deposit. And hand the major project back to the government at no cost.
Mines Secretary Balvinder Kumar told Reuters that Rio Tinto has decided to pull out of Bunder completely. With the major miner electing to return the project to the government, rather than pursue other options for the project.
The move is surprising in the utmost. Given that Rio Tinto says it has spent a full $90 million exploring and delineating a diamond deposit at Bunder over the past 14 years.
That work has been reasonably successful. Defining a diamond resource at Bunder that runs some 34.2 million carats — putting the deposit on par with some of the world’s top mines.
And yet Rio Tinto is now walking away. Not selling, not joint venturing, not starting a strategic review.
Which leads to the question: why?
Part of the answer may lie in the politics of developing a mine in India. After all, the fact that the Bunder project has now been running for 14 years speaks to the slow pace of work in this part of the world.
And government officials themselves pointed out this week that the project is located in a forest area important to tigers and other wildlife. Meaning that environmental concerns could be playing a part in Rio’s decision to exit the project.
All of which seems to strike a cautionary tone for large-scale mining in India. Watch to see what the next steps are for the project — with officials saying they will now seek to auction the property, or allocate it to an Indian state mining company. A bid from a foreign miner would be a reassuring vote of confidence here.
Here’s to giving it away now,
Dave Forest
