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`Rio Tinto's share in global diamonds will be 30 per cent by 2003'
Sharad Mistry
Mumbai: After four months of fierce, but failed takeover battle against its arc rival De Beers, the global rough diamonds major, Argyle Diamonds of Australia finally is where it was - with Rio Tinto, the leading mining group of Australia. De Beers' had in July this year led an A$522.1 million all-cash bid for shares of Ashton Mining largely owned by Malaysia's Malaysia Mining Corporation. Rio Tinto, owning large part of Argyle Diamonds, stepped in to acquire the Ashton shares bid by De Beers.The takeover battle ended last month energising Argyle Diamonds once again after it stepped out of De Beers' Central Selling Organisation in mid-1996. Argyle Diamonds gets 95 per cent of its roughs processed by Indian diamond industry. Its Indian representative Ms Nirupa Bhatt spoke to The Financial Express last week on various related aspects. Excerpts. On the importance of diamonds at Rio Tinto after the changed scenario Rio Tinto, a large global mining corporation recognized for adopting strategic long term positions in significant commodities, is taking a long-term view of its stake in the diamond industry. No longer a minor member of Rio Tinto's big industrial minerals group, diamonds will now form the backbone of the newly created Diamonds, Gold and other Products Group, reflecting Rio Tinto's increasing share of the world diamond market.The recent takeover of Ashton delivered Rio Tinto full control of the 30 million carats of diamonds a year, Argyle Diamond mine in Western Australia. The company now accounts for about a quarter of all diamonds produced each year, ranking it second behind South Africa's De Beers group.Rio Tinto's share should top 30 per cent by 2003, when its 60 per cent owned Diavik mine is due to come on stream in 2003 producing a further 6 to 8 million carats each year. On the impact of changes on the Indian and global diamond industryThe Indian diamond industry will continue to dominate the global diamond industry. It is the world's largest producer of polished diamonds, with 50 per cent of world production by value and over 70 per cent of the world production by volume processed in India.On the global front, the diamond industry has many challenges ahead with an increasingly competitive and potentially volatile environment. It is not for us to predict what will happen to the industry structure with the recent changes at Rio Tinto and Argyle mines. On the size of Argyle's diamond mine and plans for expansion and extension of the life of the mines for increased competition The current AK1 open pit at Argyle has been subject to evaluation of a number of options aimed at increasing the life of the ore body. With commencement of a pit expansion programme in Argyle's mine life has been extended to 2006 at a rate of 25-30 million carats (MCts) per annum plus or minus 10 per cent. Underground mining is still an option with a deep drilling programme currently underway.On changes in marketing strategy to meet the increased competition and plans if any, to open sales office in IndiaArgyle plans to continue with its very successful market support programme, through the Indo Argyle Diamond Council (IADC). Argyle's focus on building demand for its product has led to a number of trade initiatives that provide direct benefits to our customers and our customers' customers. These initiatives include the International Coloured Diamond Design Competition, the Champagne Diamond Promotion Campaign and, since 1994 the Indo Argyle Diamond Council (IADC). The IADC was launched by Argyle in response to research results that showed that trade buyers of diamond jewellery in the US were not kindly disposed towards purchasing products, from Indian jewellery manufacturers. This reluctance was based on a range of issues. Currently there are no plans to open sales office in India. Argyle knew that it could help to overcome this barriers because of detailed knowledge of the USA market and the dynamics of the industry. The mission of the IADC is "to develop the IADC members as suppliers of the first choice in the USA for small diamonds and fine jewellery featuring small diamonds". Accordingly, it has implemented: A) The provision of effective product support programmes. The achievement of superior standard in design and quality. B) The adoption of customer focused business practices. C) The adherence to ethical business practices as defined by IADC statement of principles. Typically 18 Indian jewellery companies have participated on an annual basis in the IADC programme which is sponsored by Argyle Diamonds. Copyright © 2000 Indian Express Newspapers (Bombay) Ltd.
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