Rio Tinto and BHP Biliton May Pursue IPO for Diamond Assets
4/17/2012 2:54:16 AM Shira
Rio Tinto and BHP Biliton may spin their diamond assets off as publicly traded companies if they cannot sell them at a premium to potential buyers. Analysts say that an IPO would attract interest in buyers pursuing emerging markets. Global diamond demand is predicted to rise an average of 5% annually.
“Unless someone comes out with a knockout bid, I think we could probably see these assets come into the public market,” said a London analyst.
Canada-based Harry Winston Diamond Corp. is currently competing with other companies to buy and merge the diamond assets—Harry Winton is currently Rio Tinto’s partner in Canada’s Diavik diamond mine. But analysts say that Harry Winston would not be able to consolidate Rio Tinto and BHP without a partner. A combined Rio Tinto and BHP would control about 10% of the world market.
“Anyone whose involved in the diamond space will be looking at these opportunities. Whether they can put together realistic bids or not or whether they've got the capability to operate the mines, that's a different question,” said expert Ed Sterck.
Rio Tinto and BHP are interesting in selling to focus on their larger primary assets, mainly iron ore. Diamond assets represent only about 5% of Rio Tinto’s earnings. Rio Tinto’s assets include its Argyle diamond mine in Australia and Diavik mine in Canada.