Rio Tinto Group’s pursuit of new diamond output to tap rising demand in Asia is focusing on an unheralded exploration project in the Canadian forest.
The world’s second-biggest miner on Tuesday added the Fort a la Corne joint venture, about 60 kilometers (37 miles) east of Prince Albert in Saskatchewan, to its published list of advanced projects after striking an agreement last month to take as much as a 60 percent stake.
The venture’s Star-Orion South project holds an estimated diamond resource of 55.4 million carats and has potential development costs of about C$2.5 billion ($2 billion), according to 2015 filings by developer, Saskatoon-based Shore Gold Inc.
“It’s a reasonable approach to be looking at commodities that are more consumer-facing than investment-facing — the portfolio is still heavily skewed towards iron ore,” Mathew Hodge, an analyst at Morningstar Inc. in Sydney, said by phone. The ore accounted for about 41 percent of revenue in 2016, while diamonds generated about 2 percent, according to data compiled by Bloomberg.
Global diamond jewelry demand hit $80 billion in 2016 on higher employment and wage growth, the top producer De Beers said in a June report. Rio has previously flagged India and China as key areas for increased demand with Chief Executive Officer Jean-Sebastien Jacques last year singling out diamonds as a priority and highlighting the company’s ambition to acquire or develop new mines.
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