Why Rio’s diamonds and minerals product group is important

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Rio’s diamond and minerals product group

Rio Tinto’s (RIO) segment includes mining, refining, and marketing operations across four sectors. These sectors include:

Diamonds and minerals

Diamonds

Rio Tinto operates three diamond mines—Argyle in Australia, Diavik in Canada, and Murowa in Zimbabwe. The company also has an advanced diamond project in Bunder-India.

Rio focuses on the mining, sales, and marketing of rough and uncut diamonds. It has a centralized sales and marketing function based in London. It has an office in Antwerp, Belgium.

The company also operates a niche business—cutting and polishing the rare pink diamonds produced at Argyle.

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Rio announced the strategic review of its diamond business in 2012. This included exploring a range of options for potential divestment. However, it’s reviewing whether more value can be created through a different ownership structure. Its peer, BHP Billiton (BHP), exited the diamonds business in 2012.

Borates

Boron performs at the cellular level. It’s important to a plant’s reproductive cycle. It controls flowering, pollen production, germination, and seed and fruit development. Borates are also used in many home and automotive applications.

Rio Tinto Minerals operates mining, refining, and shipping facilities on four continents. Rio has a joint venture potash exploration project in Saskatchewan and Jadar. Its lithium-borate project is in Serbia.

Salt

Dampier salt is a joint venture between Rio Tinto—68%, Marubeni Corporation—22%, and Sojitz—10%. It’s located in the hot, dry climate of northwestern Australia. It has three salt operations located at Dampier, Port Hedland, and Lake MacLeod. It’s headquartered in Perth, western Australia.

Rio’s approach to salt production involves extracting seawater or naturally occurring underground brines. Then it uses the sun’s evaporative power and the wind to crystallize pure sodium chloride salt in a series of ponds called crystallizers.

Titanium dioxide

It’s a key component in paints, plastics, paper, and inks. Rio Tinto Iron and Titanium (or RTIT) includes Richards Bay Minerals in South Africa, Rio Tinto Fer et Titane in Quebec, and QIT Madagascar Minerals.

Rio mainly sells titanium dioxide feedstock to pigment producers. Pigment manufacturers refine the feedstock more to produce a titanium dioxide pigment. The titanium dioxide feedstock is RTIT’s main product. However, it also sells other products that are derived during ilmenite mining and processing.

This segment also has one undeveloped iron ore project in Guinea—the Simandou project.

While RIO and BHP have exposure to different product groups. Vale SA (VALE) and Cliffs Natural Resources (CLF) are iron ore plays.

The SPDR Metals and Mining (XME) invests in above stocks.

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