Someone pointed this interesting nugget from Rio Tinto’s recent presentation at the Plumb Club (PDF) …
Rio Tinto’s diamond division produces, by its reckoning, 16% of world production by volume, and 8% by value. (It owns Argyle, Murowa in Zimbabwe, and markets 60% of production from Diavik.) Its annual earnings last year were between $250 and $300 million.
De Beers, whose business consists soley of diamonds, produces about 40 percent of the market by value. Yet its annual profits (PDF) were $483 million for the year. This does seem like Rio’s diamond production is considerably more profitable than De Beers’.
Now, this may not be an entirely fair comparison, as De Beers has certain expenses that Rio doesn’t, including its retail chain, legal fees, etc. But it does perhaps provide a clue on why De Beers has focused on reducing costs lately, including cutting marketing …Follow JCK on Instagram: @jckmagazine
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