While De Beers has offered to buy Ashton's all outside shares at A$1.62 per share, Rio Tinto has expressed though its counterbid to buy all these shares at A$1.85 per share. If the counterbid succeeds Argyle can become Rio Tinto's wholly-owned mine as it already has nearly 60 per cent stake in it. If De Beers succeeds it can get hold of 40 per cent output of that mine which it can sell through its own Diamond Trading company. Before Argyle broke away from De Beers's Central Selling Organisation in July 1996, the latter was selling the bulk of Argyle's output under a marketing arrangement between the two.

On condition of anonymity, sources close to the industry say that it may always be in the best interest of the Indian industry to have more than one major suppliers of roughs. Some representatives of Argyle flew into Mumbai recently and the Indian industry's stand was explained to them. Referring to De Beers's immediate reaction to the counterbids that "we are considering our options which include whether to increase our bid for Ashton", industry sources believe that in that case Rio, Tinto may also do the same, looking to the latter's chief executive Leigh Clifford's statement that "Argyle has developed a highly focussed and profitable niche diamond business which we are determined to continue."

Industry sources also say that Rio Tinto is not a swing-player in diamond business. It has long-term interests in diamond industry with enough financial resources and expertise in mining field. For instance, apart from its nearly 60 per cent stake in Argyle, it is going ahead with its plans to develop a major diamond mine at Diavik in Canada. Besides, some early stage programmes undertaken by it elsewhere in Canada have resulted in identification of diamondiferous kimberlite pipe on the Tahera option in Nunavat. Moreover, processing of surface bulk samples is continuing in French Guyana. Also, drill sampling is continuing in certain areas of Brazil. Thus it has long-term interests in diamond business with the necessary expertise and experience.

Sources say that the prices for Ashton shares have already gone far above the bid and counterbid rates and whoever wants to take over Ashton will have to pay substantially higher prices. Sources do not think that the cost may come the way of Rio Tinto, if it is determined to acquire Ashton to complete its hold on Argyle which has become highly profitable and whose life is now expected to be extended at least up to 2018. Financially Rio Tinto is quite strong with its shareholder's funds standing at $7.31 billion dollar at the end of June 30,2000, compared with $6.84 billion dollar at the same time a year earlier. The Indian diamond industry is keenly watching all developments in this regard, sources say.

When Argyle stones first appeared on the world markets, after the mine went into production in the mid-1980s, some of the cutting centres, according to sources, found them to be too hard to process and dubbed them as industrials and junk, unsuitable for the jewellery industry. The highly pains-taking Indian artisan, however, achieved amazing success in processing these stones, so much so that the bulk of Argyle's output is coming to India these days. Fortunately for the Indian industry, there has been a strong demand in the USA, the world's largest consuming centre for these small, affordable diamonds, while costlier ones remain somewhat neglected. This may be one of the reasons for the present fight for a stake in the Argyle mine.