Rio Tinto, the world's second-largest miner, has reopened its Argyle underground diamond mine in Western Australia that supplies more than 90 percent of the world's rare pink diamonds, after spending $2.2 billion to extend the min's life to at least 2020.
The London-based mining company has shifted from open pit mining to underground mining at Argyle, which has used the latest block caving technology.
The average annual production over the life of the mine is likely to be 20 million carats per year, compared to Rio Tinto's total production of 13.1 million carats in 2012.
Rio Tinto diamonds and minerals chief executive, Alan Davies said the Argyle mine had produced some of the world's most spectacular diamonds and had delivered many benefits to the local region.
"The new Argyle underground mine has allowed us to extend the life of this iconic asset for Rio Tinto and Western Australia. I am proud that we can continue our contribution to local employment and the economic development of the East Kimberley region, as we have over the past quarter of a century."
The Argyle mine has produced some 800 million carats of rough diamonds over the last 25 years including a small but consistent supply of the world's rarest pink diamonds.
Argyle diamonds are highly sought after for fashion jewelry in both established and emerging markets.
Argyle Diamond Mine managing director, Kim Truter said, "The Argyle Diamond Mine is a world class resource which has been strongly supported by Rio Tinto since exploration began in the 1970s.
"A new chapter begins at Argyle and I am proud to acknowledge the many men and women who have contributed to the discovery and development of the mine and the production of some of the best diamonds the world as ever seen," he said.
Rio Tinto, which in February announced its first ever full year net loss of almost $3 billion, had last year said that it will exit the diamond business by selling its mines in Australia, Canada, India and Africa and focus on expanding in more profitable commodities such as iron ore, copper and uranium. (See: Rio Tinto to exit diamond business)
That announcement was once again reiterated yesterday at a briefing in Perth by its CEO, Alan Davies, who said that the company may consider selling individual mines should they fetch higher shareholder value.
Rio Tinto, the third-largest diamond producer behind De Beers of South Africa and Russian state-owned Alrosa, operates three producing diamond mines, the fully-owned Argyle mine in Australia, the 60-per cent owned Diavik mine in Canada, 78 per cent in the Murowa mine in Zimbabwe. It also fully-owns the Bunder advanced diamonds project in India.
The value of Rio Tinto's diamonds business on its books is $1.2 billion, but analysts say that the business may fetch around $2 billion.
Rio Tinto, which produces around 15 per cent of the world's diamonds by volume, has seen its earnings from diamonds a loss of $48 million last year, compared with a profit of $10 million in 2011.