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Rio Tinto opens underground mine

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Staff writer |
Rio Tinto Argyle Diamonds MineRio Tinto has opened an underground mine at its Argyle Diamonds Mine in northern Western Australia. During 30 years of operation, the diamonds at the open-cut mine are all collected.

Rio Tinto has built the underground pit with 40 kilometres of tunnels. The mine extends about one kilometre underground and the ore body extends 4500 to 500 metres below that. The $2.2 billion expansion should extend the life of the mine until at least 2020.

The company is trying to sell that mine and other diamond businesses that are not its core assets. UBS values Rio's diamond business at $2 billion and the company is looking at a public float or a trade sale and it's selling strategy goes both ways at the moment. Rio Tinto alreadyhas had talks with interested parties.

The most valuable asset at the Argyle Mine is the supply of pink diamonds. Rio Tinto supplies 9% of the world's pink diamonds, which are sold to collectors, investors and luxury jewellers. A three carat pink diamond could be worth as much as $3 million.

The company has also been cutting costs at the site: it laid off 350 contractors, the mine employs about 1,000 people, but that number will decrease to 700. Rio Tinto expects the mine to produce about 20 million carats every year from about 2015.

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