Two big Canadian diamond mines may soon have one owner, as The Australian newspaper is reporting that BHP Billiton (BHP) and Rio Tinto (RTP) are discussing a merger of the Ekati and Diavik mines.
The two global mining companies recently announced an iron ore joint venture. According to media reports, the two erstwhile rivals - BHP Billiton made an unsuccessful hostile run Rio Tinto last year - are now in talks on other projects that could be combined.
Diamonds are a sideshow at both companies, so there’s no strategic roadblock to a merger. And the two Canadian mines are 30 kilometres apart, so analyst Edward Sterck at BMO Nesbitt Burns said in a report Tuesday “operational synergies are likely to exist and could lead to reduced production costs.”
If there is a deal that results in synergies at the two mines, Mr. Sterck pointed out that Harry Winston Diamond (HWD), owner of 31 per cent of Diavik, “could also benefit from cost reductions.”
