BHP Billiton Diamonds Review Ongoing; De Beers Says Won't Bid
06/17/2012| 03:59am US/Eastern
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By Robb M. Stewart
MELBOURNE--BHP Billiton Ltd. (BHP, BHP.AU) continues to pursue the possible sale of its diamonds mining business, but De Beers SA has ruled itself out of the running for the Canadian operation.
BHP in November launched a review of its diamonds unit, which centers on the Ekati diamond mine, located some 200 kilometers south of the Arctic Circle, and said it would consider the sale of all or part of the business. In December, it agreed to sell its 51% stake in the Chidliak diamonds exploration project on Canada's Baffin Island to venture partner Peregrine Diamonds Ltd. (PGDIF, PGD.T).
The process is still ongoing, Fiona Martin, a spokeswoman for the mining giant in Melbourne, said Sunday. She declined to comment further on the process.
De Beers, one of the world's largest producers and marketers of diamonds, won't bid for Ekati, said Lynette Gould, a spokeswoman for De Beers in London.
"De Beers is very comfortable that it currently has the best diamond mining assets in the world, and management's focus is on maximizing their value," Ms. Gould said in an emailed reply to questions.
De Beers, which is majority owned by Anglo American PLC (AAUKY, AAL.LN), mines for diamonds in Botswana, Namibia, South Africa and in Canada in remote northern areas only reachable by road for six to eight weeks a year. It produced 31.3 million carats in 2011.
Ekati, located 310 kilometers northeast of Yellowknife, has produced an average of more than 3 million carats of rough diamonds a year over the last three years. However, the business is a relatively small driver of BHP's earnings compared with iron ore, coal, oil and other commodities.
BHP has said it would continue to operate the diamonds business if a deal can't be done that would preserve Ekati's safety and environmental standards and protect the benefits the mine has created for local communities.
Diamond miner and jewelry retailer Harry Winston Diamond Corp. (HWD, HW.T) and private equity firm KKR & Co. (KKR) have both been tipped as potential suitors for Ekati, according to media reports. A spokeswoman for Harry Winston and spokesman for KKR declined to comment.
Write to Robb M. Stewart at robb.stewart@wsj.com
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