Rio Tinto had a good year in diamonds. A strong rise in rough diamond prices had led to an increase in gross revenue from diamonds in 2014 despite a sharp drop in diamond production. Gross revenue increased to $901 million, up 5.8% from $852 million in 2013.
Breaking Down Rio Tinto’s Year
In 2014, the company mined 13.87 million carats, a 13% year-over-year decrease. The decrease coincides with the move from open-pit to underground mining at Argyle and the processing of lower grades as underground diamond production ramped up at the Australian mine.
The miner stated that during 2014, diamond prices increased 6%. A comparison of revenue versus production during the year shows a 22% increase in average per carat price over 2013.
The company has a positive medium to long-term outlook and expects sustainable future price growth as resources are steadily declining, compounded by limited exploration investment and success.
In 2015, Rio Tinto’s share of diamond production is expected to be 21 million carats of diamonds.
The diamond unit reported EBITDA of $315 million. Net earnings doubled to $104 million. Rio Tinto halved capital expenditure on diamonds to $148 million in 2014 following lower spend on the Argyle underground mine.
The Argyle underground mine remains on track to reach full capacity in 2015. Diavik’s production was in line with 2013, with improved mining rates and processing plant improvements offset by the impact of lower grades.
The company’s diamond mining interests are Argyle (100%), Diavik (60%) and Murowa (77.8%).
Photo: The Argyle Pink Jubilee Diamond Copyright © 2014 Rio Tinto