December 04, 2008

BHPB bid for Rio –Could shake up Canadian diamond industry

Reuters reported that BHP Billiton's proposed takeover of Rio Tinto may trigger a shake up of the diamond industry in northern Canada as it would allow BHP to add Rio's 60% stake in the Diavik diamond mine in Canada's Northwest Territories, which yielded nearly 10 million carats in 2006 in addition to its own Ekati mine, which produces about 4 million carats a year.

Both BHP and Rio have at times been rumored to be eager to get out of the diamond mines. These assets are widely seen as non core for both companies, which focus on base metals, attempts to streamline the companies or sell assets to raise funds could see the mines come on the market. The report cited Mr David Whetham fund manager at Scotia Cassels as saying that "That is an obvious place where if they wanted to sell something, they could.”