BHP studies potential EKATI diamond sale
By Peter Koven
BHP Billiton Ltd. announced it will study a potential sale of its diamond assets, including the ultra-rich EKATI mine in the Northwest Territories.
BHP, the world’s biggest mining company, has made a lot of money at EKATI over the years, but the company said that after “many years of extensive exploration” in the Arctic, it sees few opportunities to develop new diamond mines that fit its strategy. “BHP Billiton’s strategy is to invest in large, long life, upstream and expandable assets while remaining a simple and scalable organization,” the company said.
In addition to its 80% interest in EKATI, BHP also owns 51% of the Chidliak exploration project in Nunavut, a joint venture with junior miner Peregrine Diamonds Ltd.
If BHP does decide to sell those assets, there are potential buyers for EKATI that are already operating in the Northwest Territories. Rio Tinto Ltd. operates the Diavik mine in the territory, while diamond giant De Beers runs the Snap Lake mine.
Peregrine will also study whether to consolidate its Chidliak stake, though in the long term, the company may need a large partner to develop the project.
BHP said the review of its diamond portfolio is expected to be complete by the end of January 2012. At that point, it will know whether or not to proceed with a sale.
The EKATI mine opened back in 1998, and has produced an average of more than three million carats of rough diamonds a year over the past three years. It produces about 10% of global diamond supply by value.
“EKATI has made a substantial contribution to economic growth and development in the North ever since diamonds were first discovered there in 1991. Its success is a credit to the great team working at the mine and the strong partnerships they have built with Aboriginal communities and local businesses” Tim Cutt, president of BHP’s diamonds and specialty products unit, said in a statement.
“The review we’ve announced today will seek to maintain that legacy so that EKATI continues to bring social and economic benefits to the North while remaining a great place to work.”