Bill champion
Managing Director
Rio Tinto's Diamond Business

A global leader in diamond production, Rio Tinto provides a fully-integrated diamond exploration, mining and marketing business. Bill Champion, Managing Director of Rio Tinto’s Diamond Business tells Ivor Vaz about the company’s longstanding association with India, amongst various other vital issues

Could you shed some light on Rio Tinto’s global diamond businesses and in particular about the Argyle mine in Western Australia

Rio Tinto’s global diamond business comprises our 100% share in the Argyle mine in Australia, 60% of the Diavik mine in Canada and a 78% interest in the Murowa mine in Zimbabwe. Rio Tinto also has a global exploration portfolio supported by diamond exploration laboratories and a leading-edge mineral chemistry analytical facility. The Argyle mine in WA is of strategic importance to Rio Tinto. Whilst it is the oldest mine in our portfolio, it has provided strong returns as well as an important foundation for the sales and marketing of our other diamond productions. The mine development at Argyle is also providing important learnings in the unique method of block cave mining for the rest of the Rio Tinto Group.

To what extent has Rio Tinto contributed to the economic boom in WA?

Rio Tinto’s mining interests in Western Australia have made a significant contribution to the economic boom in WA. The key driver is clearly the vast iron ore deposits that Rio Tinto has, as well as a not insignificant contribution from diamonds and salt.

Tell us about the unique relationship that Rio Tinto Diamonds and India share?

Yes, we have a great relationship with the Indian diamond industry and one which spans some 25 years. Almost all of the Argyle diamonds are cut and polished in India and destined for use in the jewellery industry. In 1989, Argyle opened an office in Mumbai to better understand the Indian market and provide our customer base of diamond traders, manufacturers and exporters with sales and technical support. Over the years we have also worked closely with the Indian diamond and jewellery industry on specific marketing programmes and assisting Indian jewellery companies in accessing the competitive US market. Our partnership with India is unique and has weathered many storms. In 1996, when we began to market the Argyle production independently of De Beers, we were able to rely on an established, strong and loyal customer base in India. This was also the case when Rio Tinto acquired 100% ownership of Argyle in 2000, when we began the production from our Diavik mine in Canada in 2004 and most recently when we were seeking endorsement for an underground mine at Argyle.

The Indian diamond inustry is highly dependent on the Aryle rough. How significant is Argyle’s role in job generation in India – particularly in Gujarat?

The Indian diamond industry to a large extent grew on the back of the Argyle production—that is a production predominantly comprising small, coloured, labour intensive diamonds. The high value add on these diamonds led to significant employment growth and economic development in regional cutting centres throughout Gujarat, such as Surat, Navsari, Ahmedabad and Bhavnagar. However, it is important to note that over the last decade or so we have seen the Indian manufacturing industry transition to processing large stones of better quality. Thus, India as a diamond manufacturing centre today has skills in producing cut and polished diamonds of virtually every size shape and colour. There has also been a concerted attempt to innovate and develop new cuts and the last five years have also seen an accelerated development on the jewellery front as well, both in terms of quality of the product and the expansion of the industry in terms of sheer size.

In June 2008, Rio Tinto lodged mining lease applications for its Bunder diamond project in the Bundelkhand region of Madhya Pradesh. This is being looked at as a vital step in the development of what could be the first significant world class diamond mine in India. Could you shed some light on this project?

We are delighted with the progress of our Bunder project in Madhya Pradesh, where we have now lodged mining lease applications. Whilst there are currently no defined diamond resources or reserves, based on our previously announced exploration target, we believe that the Bunder project has the potential to be a world class mine, producing up to two to three million carats per annum. Furthermore, this is where Rio Tinto’s strengths and experience lies – namely working with local communities to build and operate world class mines. Of equal importance is our track record in introducing new diamond productions to the market. So, our work on the Bunder project has the potential to take our partnership with India to another level – we are very excited by the prospect of mining and marketing Indian diamonds

Rio Tinto had launched a Business Excellence Model (BEM) specifically for the Indian diamond industry, structured around health, safety, environmental concerns and social responsibility, and it offered a BEM certification to organisations. What has been the reaction from the industry to this strategy?

The industry has reacted very favourably to the BEM. It was a first for the Indian diamond industry in terms of providing a benchmark in corporate governance and since its launch in 2003, has contributed to boosting the image of diamond manufacturing and retailing. We are very proud to be part of this initiative and we are investing significantly in communicating the benefits of using a BEM certified manufacturer to diamond jewellery retailers.

You have chosen not to enter the retail market despite some of your competitors like De Beers going that route. Any specific reason for this?

We have made a strategic decision to remain upstream in the diamond industry, apart from the Argyle pinks where we operate as a niche player in polished wholesale business. The mining and marketing of rough diamonds is our core business – we have a strong foundation that we have built on and it is where we feel most comfortable operating.

Please tell us about Rio Tinto’s future plans.

We have put in place a strong plan for the future of Rio Tinto’s diamond business. We have a strong set of diamond assets, great capabilities and a robust macro economic context to work within. We aim to be a leader in sustainable development, are focussing on safety, performance, cost reduction and delivering on our growth targets. We will continue to work with our customers on differentiated marketing programmes to ensure maximum value to all concerned.