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With the closure of the Argyle Mine in Western Australia and legal battles in Canada, Rio Tinto's overall diamond production declined in 2020. Image credit: Rio Tinto
With the closure of the Argyle Mine in Western Australia and legal battles in Canada, Rio Tinto's overall diamond production declined in 2020. Image credit: Rio Tinto

Rio Tinto’s diamond output shrinks as it exits Australia

Mining giant Rio Tinto has announced its total diamond production fell 14 per cent in 2020 to 14.7 million carats, with its Australian mine entering its final year of production and amid multiple legal challenges in Canada.

The largest contributor to the company’s overall decline in diamond recoveries was a 16 per cent decrease at the Argyle site in Western Australia. The mine, of which Rio Tinto is the sole owner, closed on November 3 last year.

Meanwhile, production at the Diavik Mine in Canada's Northwest Territories, which Rio Tinto operates in partnership with Dominion Diamond Mines (‘Dominion’), saw a decline of 7 per cent to 3.7 million carats.

"The largest contributor to the company’s overall decline in diamond recoveries was a 16 per cent decrease at the now-closed Argyle site in Western Australia"

Rio Tinto and Dominion were locked in a legal battle throughout 2020. Dominion, which owns a 40 percent stake in the Diavik site, filed for insolvency protection in April last year, citing the fallout from the COVID-19 pandemic.

After successfully blocking an attempt by Rio Tinto to sell off its portion of recovered diamonds in order to resolve unpaid debts last November, Dominion appears to have narrowly avoided collapse by completing the sale of its neighbouring Ekati Mine to a group of creditors.

Its share of the Diavik Mine was not included in the deal and its role in the site's future remains unknown.

Rio Tinto announced it expects to produce between 3 million–3.8 million carats of diamonds at Diavik – its sole remaining fully-operational diamond mine – in 2021.

Meanwhile, Rio Tinto’s other Canadian mining partner, Star Diamond Corp (‘Star’), has announced positive results from bulk sampling at its Star-Orion South project in Saskatchewan.

More than 3,500 diamonds, weighing a total of 210.68 carats, were recovered in the latest sample, which includes three larger Type IIa stones. Pink diamonds are always Type IIa, while yellow diamonds have previously been unearthed at the site.

Ken MacNeill, president and CEO Star Diamond Corp
Ken MacNeill, president and CEO Star Diamond Corp
"The recent recovery of larger Type IIa diamonds from Rio Tinto Canada's bulk sample program continues to strengthen our expectation for recovery of large, high value diamonds in a future producing diamond mine"
Ken MacNeill, Star Diamond Corp

“The recent recovery of larger Type IIa diamonds from Rio Tinto Canada's bulk sample program continues to strengthen our expectation for recovery of large, high value diamonds in a future producing diamond mine,” Ken MacNeill, president and CEO, Star Diamond Corp, said.

Rio Tinto and Star are also involved in an ongoing legal battle, with Star alleging its partner had engaged in “bad faith predatory practices” throughout the course of their dealings. The company also objected to Rio Tinto exercising an early option to acquire a 60 percent stake in the site. Rio Tinto describes the claims as “baseless”.

It also accused Rio Tinto of mismanagement and cost overruns, which Rio Tinto denied.

Star – then known as Shore Gold – first began drilling at the site in 1996 and brought on Rio Tinto as a partner in 2017 in order to develop the site, which analysts have described as “very cumbersome because of the size and the expense”.

As reported by Mining.com last August, a Canadian court has ruled that the case can proceed to trial, but warned Star that it faces an “uphill battle”. A trial date has not yet been set.

 

More reading:
Argyle Tender breaks records during pandemic following pink diamond mine closure
Rio Tinto announces new diamond tender; mining partner on verge of collapse
Rio Tinto faces further legal challenges in Canadian mining venture
Rio Tinto embroiled in legal battle with mining partner











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