Rio Tinto has formally approved the development of a fourth pipe, known as A21, at the remote subarctic Diavik Diamond mine site in Canada.
Rio Tinto Diamonds & Minerals chief executive Alan Davies said:
“Our decision to invest in the Diavik A21 project reflects our strong confidence in the diamond sector and in our ability to compete effectively in the industry.”
Global demand for diamonds on the increase
The mine produces predominantly gem-quality diamonds destined for high end jewellery in all major consumer markets around the world.
Global demand for diamond jewellery reached a record high of US$79 billion in 2013 according to The De Beers Group of Companies.
The world’s largest diamond jewellery market is the United States driven by on-going economic recovery and demand is expected to continue to grow over the long-term. Indeed, sales of polished diamonds in the US increased 7% in 2013
Demand is also growing with the growth of the middle classes in developing markets such as India and China. They have seen their domestic diamond jewellery markets grow by a compound annual growth rate of 12 % in the six years to 2013.
Background to the project
The Diavik diamond mine project in Canada is a joint venture between Rio Tinto (60%) and Dominion Diamond Corporation (40%).
The Diavik Diamond Mine is located 300 kilometres northeast of Yellowknife, capital of Canada’s Northwest Territories. Production began in 2003 and became a fully underground mining operation in 2012.
Diavik Diamond Mines president Marc Cameron said the development of the A21 pipe:
“Is great news for Diavik, but also for the local communities in which we operate where we are committed to delivering economic and social benefits that will endure beyond the life of the Diavik mine.”
The estimated cost for the 4 year development is US$350 million with production commencing at the end of 2018.
The current mine plan has production ending in 2023.