Rio Tinto exits Zimbabwe selling off diamond and coal assets

Anglo-Australian mining giant Rio Tinto Plc has sold its entire stakes in Zimbabwe's diamond and coal mines to local mining groups, exiting the country after six decades, to focus on its core diamond operations elsewhere.

Rio's 78-per cent stake in Murowa Diamonds in south-central Zimbabwe and its 50-per cent interest in Sengwa Colliery Ltd in north-western part of the country were sold to Zimbabwe's RZ Murowa Holdings Ltd for an undisclosed sum.

RioZim Ltd, an independent local mining company listed on the Zimbabwean Stock Exchange, which holds the remaining 22-per cent in Murowa Diamonds and 50 per cent in Sengwa, would manage both the assets.

Financial details of the transaction have not been disclosed. According to a Deutsche Bank estimate, the Murowa mine was valued at $279 in 2013.

Rio Tinto said the future of the two assets could be best managed by entities with existing interests in Zimbabwe.

The country's mining development minister Walter Chidhakwa has stated that he was going ahead with his plans to merge all of Zimbabwe's diamond mining companies and the merged entity will be licensed to undertake all diamond mining operations in the country.

The minister had earlier said that managing the diamond mining industry in Zimbabwe was proving problematic, as some of the mining companies were resisting the controversial decision.

Rio hinted to its employees in January about shutting down the Murowa operations due to high government taxes.

The diamond industry in the country is ''overburdened sector that is already paying 15 per cent royalties'' in addition to other charges, according to the country's chamber of mines.

The Murowa diamond mine, located in south-central Zimbabwe, began its operation in 2004 and produced around 442,000 carats, of large, mostly white, gem-quality diamonds in 2014 with 10 per cent of the production reserved for local cutting and polishing industry.

Zimbabwe's overall diamond output dropped 34 per cent to 5.9 million carats in 2014 due to depletion in alluvial deposits in the country's major Marange diamond field.

Rio Tinto Diamonds and Minerals chief executive Alan Davies said, ''Rio Tinto remains committed to the diamond industry and is focused on operating its two world-class underground mines whilst obtaining the approvals for its advanced diamond project in India.''

Rio's Argyle diamond mine in Kimberly region of Western Australia is one of the world's largest suppliers of diamonds and has produced more than 800 million carats of rough diamonds since operations began in 1983.

The company also owns a 60-per cent interest in Canada's remote Diavik diamond mine which produces around 6-7 million carats of gem-quality diamonds annually.

Rio's most advanced exploration project is at Bunder in the Indian state of Madhya Pradesh where the miner has discovered a cluster of eight diamondiferous pipes.