It is the first time the company is reportedly tendering the 7 -10’s during this week's February sale. Previously, Rio only applied a tender system for diamonds of 10.8 carats and larger, which are considered ‘Specials’.
The move comes as the diversified miner is restructuring its diamond operation based in Antwerp. Over the past few months, sales of Rio’s Argyle production of predominantly cheaper goods have come under increasing pressure, due to weak market conditions. As a result, the company has built up a stockpile in the area of $150 million and reduced prices by around 10%. The company increased prices slightly in January, but is understood to have kept Argyle prices unchanged during the February sale this week.
In Rio’s Diavik production, traders reported some increases, reportedly in coated goods. Earnings at its diamond division fell by 27% to $205 million for the full year of 2006. Revenue dropped by 22%, due to weakened market conditions.
Rio Tinto – owner of Australia’s Argyle mine and a majority stakeholder in Canada’s Diavik and Murowa in Zimbabwe - is seen to be looking at becoming a key player in the diamond industry, previously controlled by De Beers. In August last year, reports emerged that Rio Tinto, Xstrata and CVRD hired financial advisers to prepare a plan for a possible joint bid on Anglo American, which owns 45% of De Beers.