Rio Tinto CEO Woos Modi to Revive India’s Diamond Past

Rio Tinto Group’s Chief Executive Officer Sam Walsh has pressed India’s Prime Minister Narendra Modi for approvals to develop the nation’s first diamond discovery in 40 years and set up a $2 billion iron-ore project.

Walsh has spoken with Modi three times in the past six months on the planned $500 million Bunder diamond mine and the Odisha iron ore project in eastern India, he told reporters today in New Delhi. Talks have also focused on the prospects of uranium exports to India and on coal mining opportunities, Walsh said.

“We’re waiting for approvals, forestry and environment approvals, which I am hopeful will come through in the near term,” Walsh said, referring to the Bunder project.

A swelling middle class in emerging economies including China and India will be key to demand for diamonds, according to De Beers, the biggest producer. By 2025, combined sales in the two nations may match the diamond jewelry market in the U.S., the world’s largest, WWW International Diamond Consultants Ltd. said in October.

The Bunder project in Madhya Pradesh, about 500 kilometers (310 miles) southeast of New Delhi, would restore India as a major producer of diamonds. The project may be one of only four new mines to enter production in the next decade, according to Rio Tinto.

Two calls to Jagdish Thakkar, a spokesman at the prime minister’s office, went unanswered.


India, which previously yielded gems including the Koh-i-Noor diamond now prized among Britain’s crown jewels, currently has one small mine in production. Bunder’s annual production rate would be about 20 times higher, Rio said in a filing.

“It would be fantastic,” Vipul Shah, Mumbai-based chairman of the Gem & Jewellery Export Promotion Council, said by phone. “There’s a good future ahead for India’s jewelry industry.”

Walsh discussed both the Bunder and Odisha projects with Modi in Melbourne in November and in New Delhi in September. London-based Rio holds 51 percent of the Odisha iron ore venture, which is forecast to yield as much as 20 million tons a year when it starts.

India’s retail diamond jewelry market is worth about $10 billion and forecast to expand at 15 percent a year through 2019, according to Rio Tinto. In China, Chow Tai Fook Jewellery Group Ltd., the world’s largest listed jeweler, is seeking to add about 300 precious gem stores by 2019 as rising incomes fuel demand for luxuries.

The Bunder deposit was discovered in 2004. Rio Tinto, which already uses about 300,000 workers in India to cut and polish diamonds from its Argyle mine in Australia, is seeking approvals to bring Bunder into production as early as in 2019.

“Strategically, it probably makes a lot of sense,” Tim Schroeders, a portfolio manager who helps oversee $1 billion in equities at Pengana Capital Ltd., said by phone from Melbourne. “Whether they make a lot of money out of it, I’m not sure.”

Rio’s diamonds and minerals unit, which also includes mineral sands and titanium assets, accounted for 5 percent of earnings in 2013, according to data compiled by Bloomberg.

In November, Rio Tinto approved a $350 million project to expand a diamond mine in northwestern Canada. The producer scrapped a planned sale of its diamonds unit in June 2013 after failing to find a buyer.

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