Rio Tinto reported in its annual financial results that its net earnings and profitability from its diamond production in 2018 had risen. Earnings rose 28.3 percent to $118 million on gross revenue of $695 million from the $92 million earned on gross revenue of $706 million in 2017. Earnings had risen despite a 15 percent lower mine production of 18.43 million carats as against 21.63 million carats in 2017.
The company said that the global supply of natural rough diamonds in 2018 was lower than 2017. Rio Tinto expects this trend to continue into 2019, as new sources of supply are unable to satisfy growing demand.
The first half of 2018 also saw a reduction in miners’ inventories coinciding with improved prices. However, in the latter part of 2018, there was an increase in inventories, predominantly of lower quality rough diamonds. This led to a softening of prices, particularly in lower-end categories.
Diamond production guidance for 2019 is between 15 and 17 million carats.
Going into production detail, the company said that at Argyle, which is fully owned by Rio Tinto, production was 18 percent less than 2017, though production was enhanced by processing higher grade alluvial tailings. At Diavik, in which Rio Tinto has a 60 percent share, production was 3 percent lower, with lower recovered grades partially offset by higher ore processing.
The year also saw the completion of the development of a fourth diamond pipe, known as A21, at the Diavik Diamond Mine in the Northwest Territories of Canada. Rio Tinto said this was within budget and ahead of schedule. The pit is now at full production following four years of construction and a $350 million investment.