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The legal row began in March 2020, with Star Diamond accusing the Anglo-Australian conglomerate of breaching the terms of the joint venture agreement.
The legal row began in March 2020, with Star Diamond accusing the Anglo-Australian conglomerate of breaching the terms of the joint venture agreement.

Rio Tinto diamond mine legal battle settled

Rio Tinto and Star Diamond Corp have settled their long-running dispute over the Star-Orion South diamond mine in Canada.
Ewan Mason, chairman Star Diamond
Ewan Mason, chairman Star Diamond
“We are very pleased to have reached a constructive resolution with Rio Tinto that puts our differences in the past, fully aligns our interests and allows both of us to singularly focus on jointly and expeditiously moving forward"
Ewen Mason, Star Diamond

Star Diamond announced on December 9 that the two companies had entered into a binding agreement that “comprehensively resolves” the issue. Star Diamond chair Ewan Mason said it was a major step forward for the project and shareholders.

“We are very pleased to have reached a constructive resolution with Rio Tinto that puts our differences in the past, fully aligns our interests and allows both of us to singularly focus on jointly and expeditiously moving forward,” Mason said.

The legal row began in March 2020, with Star Diamond accusing the Anglo-Australian conglomerate of breaching the terms of the joint venture agreement.

In a press release announcing the settlement, Star Diamond stated that under a new agreement: 

  • All expenditures on the project prior to December 31, 2021 will be the sole responsibility of Rio Tinto’s subsidiary, Rio Tinto Exploration Canada Inc. (RTEC)
  • All expenditures between January 1, 2022 and the public announcement of a decision to develop a diamond mining operation, based upon the completion of a positive feasibility study, will initially be advanced by RTEC. Star Diamond will not be required to begin reimbursing RTEC for Star Diamond’s share of these expenditures unless and until commercial production has been achieved.

The resolution means that Star Diamond will have “no obligation to contribute additional investment to the project until a decision to develop the mine is made and publicly announced”.

The dispute began when Rio Tinto exercised an option to acquire 60 per cent stake in the project five years ahead of the original agreement deadline.

In court documents filed in March 2020, Star Diamond Corp claimed Rio Tinto “engaged in bad faith predatory practices … with a view of diluting Star Diamond’s interest in the properties”.

Star Diamond also questioned Rio Tinto’s spending on the project, claiming Rio Tinto spent $CAD168 million ($AU184 million) to complete a 10-hole bulk sample program that Rio Tinto said would cost $CAD18.5 million ($AU20.31 million). Star also claimed Rio Tinto had declined to share the results of that sampling.

In response Rio Tinto said it had “conducted itself in good faith and carried out the operations in a good and workmanlike manner”.

"Star Diamond also questioned Rio Tinto’s spending on the project, claiming Rio Tinto spent $CAD168 million ($AU184 million) to complete a 10-hole bulk sample program that Rio Tinto said would cost $CAD18.5 million ($AU20.31 million). Star also claimed Rio Tinto had declined to share the results of that sampling."

And against the claims of overspending it stated that Star Diamond never “disputed that those expenditures were properly incurred and justified in the context of the project”.

Rio Tinto also claimed the sampling results “do not exist”.

At the time Mason handed out some brisk criticism, stating that Rio Tinto had “little regard for the agreements it signs, business ethics, local stakeholder interests or anything other than its own monetary self-interest”.

Star Diamond president and chief executive Ken MacNeill weighed in with: “The Star-Orion South Diamond Project is one of the most potentially valuable diamond projects in existence … if Rio Tinto wants to own 100 per cent of the project, it needs to pay fair value for it.”

In a counter claim, Rio Tinto said it was entitled to the ownership of the mineral dispositions and the surface rights and Star Diamond had improperly retained them.

A media statement released by Star Diamond after the agreement was signed quoted Rio Tinto’s head of exploration Dave Andrews as saying: “We are very pleased to now be working cooperatively with Star Diamond on a diamond project that we believe has the potential to be a significant contributor to both the local communities around the Fort à la Corne property and the broader Saskatchewan economy.”

The diamond mine is forecast to extract 66 million carats over its projected 38-year life span, generating an estimated $CAD3.3 billion  ($AU3.63 billion) and is predicted to employ 700 people over that time.


More reading
When two diamond miners go to war: Rio Tinto in legal stoush
 











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