While that option may sound fairly simplistic in discussion, the complexity of putting it into practice should not be underestimated. And, there hasn't been any indication from the companies that they are considering it.

Speculation as to who may show interest in acquiring Rio Tinto's and BHP Billiton's assets includes private equity firms and other miners. Whether the potential divestment of these assets translates into an opportunity to further diversify the diamond industry or into a move back toward consolidation remains to be seen.

However, industry insiders warn that it will take more than financial savvy and deep pockets to be successful in this arena.

Harry Winston's chairperson and CEO, Robert Gannicott,  described potential suitors as a “narrowed field.”

“The mining part is pretty much the same as for anything else,” he told Mining Weekly, “but beyond that - to be able to process the ore properly, to be able to sort and sell and realise the full market price for diamonds is a specialist trade.”

BHP Billiton and Rio Tinto are the second and third notable players in the past several months to express a desire to get out of the diamond industry.

Further along in the process is the Oppenheimer family, who in November agreed to sell their 40 percent interest in De Beers to Anglo American (OTC Pink: AAUKY,LSE:AAL) for $5.1 billion. In doing so, the family is severing a connection to the industry that dates back almost a century.

The South African Competition Tribunal has given its approval for the deal, which is expected to be completed later this year.

 

Securities Disclosure: I, Michelle Smith, do not hold equity interests in any of the companies mentioned in this article.

Reassessment of Diamond Properties: A Trend? from Diamond Investing News

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