(Submitted/Star Diamond)

By Glenn Hicks

DIAMOND MINING

Diamond mine could take 6 years to start: expert

Mar 13, 2019 | 5:00 PM

A diamond industry expert says even if Rio Tinto decides to proceed with a diamond mining operation at Fort à la Corne, east of Prince Albert, it wouldn’t start up for at least another six years. The mining giant is set to get underway with large scale bulk sampling of the Star and Orion South deposits in the coming months.

Paul Zimnisky, a New York based analyst, told paNOW the situation required a lot more patience than most would like but Rio Tinto needed to properly explore and analyze the deposits, given the $1 billion investment that would be likely in such a large venture. The project could operate for over thirty years.

“At this point there probably wouldn’t be a production decision before 2021,” Zimnisky said. “And even if they decided to go ahead, you’re looking at another three or four years for construction, so you’re looking at 2025 at the earliest.”

Rio Tinto has already stated it could take years before deciding whether to establish a mining operation. If it happened it would employ up to 700 people.

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Zimnisky characterized the context of the current world diamond climate as a complex one.

On the negative side he noted the over-supply of stones in many categories and the fact that marriage rates were declining in key markets such as the United States, Japan and China. The idea of the fancy engagement ring isn’t as it once was. He added there’s a new generation of consumers less inclined to spend big money on material luxury products, and there’s an erosion of consumer opinions about diamonds over the last decade. The 2006 movie Blood Diamond, which depicted the mining of diamonds in developing countries to finance conflict, took some sparkle from the commodity. Star Diamond Corporation, which owns the deposits at Fort à la Corne, has highlighted the fact that the deposits are in politically stable Canada which respects the rule of law.

Zimnisky added another negative facing the industry was the competition from far less expensive lab-created gemstones.

But he said the list of factors wasn’t deterring Rio Tinto because on the positive side “There’s almost no exploration development taking place in the industry right now, the large legacy assets are depleting [at mines around the world] and there very well could be a supply shortage in future.”

Zimnisky said Rio Tinto had their eye on the longer term and wanted to diversify their mining portfolio with less than two percent of their business currently invested in diamonds.

“Management at Rio Tinto has been very clear they still like diamonds and they want to continue to hold diamond assets …as long as they’re world-class assets,” he said. “And Star-Orion South is certainly a world class asset.”

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glenn.hicks@jpbg.ca

On Twitter:@princealbertnow