Rio Tinto Wants to Sell Dominion’s Diamonds

RAPAPORT… Rio Tinto has asked a Canadian court to allow it to sell its partner’s portion of rough diamonds from the Diavik mine to recoup more than CAD $120 million ($91.4 million) required to run the mine.

Dominion Diamond Mines, which owns 40% of the joint venture, filed for creditor protection in April, citing mounting debt and an inability to sell its diamonds during the coronavirus pandemic. It has since missed two cash calls to Rio Tinto subsidiary Diavik Diamond Mines Inc. (DDMI) totaling CAD 119.5 million ($91 million), used for the running of the mine, and also owes it interest of CAD 2.4 million ($1.8 million).

“Dominion has not repaid the…payments, or any portion thereof, and has no intention of doing so,” DDMI said in court documents filed last week.

The court previously granted DDMI the right to hold some of Dominion’s rough as collateral while Dominion was in creditor-protection proceedings. Meanwhile, Dominion was seeking to sell its operations at the Ekati mine to affiliates of its owner, the Washington Companies. However, that deal fell through, leaving Dominion with no prospects, DDMI noted.

The lack of money coming from Dominion puts the Diavik operation “at risk,” DDMI noted.

“It would be unjust and inequitable not to permit DDMI to recover amounts owing to it,” DDMI added.

A court hearing on the matter has been set for October 30.

Image: Rough diamonds from the Diavik and Ekati mines. (Dominion Diamond Mines)