Rio Gifts India Diamond Mine to Madhya Pradesh Government
The Bunder project was closed as Rio sought to cut costs and conserve cash.
(Bloomberg) -- Rio Tinto Group has decided to gift the Bunder diamond deposit in India to the state government of Madhya Pradesh, where the mine is located, after the producer stopped work on it last year.
The Bunder project was closed as Rio sought to cut costs and conserve cash. Under an order signed last month, the Madhya Pradesh government will take ownership of the assets, including all the land, plant, equipment, and diamond samples recovered during exploration, Rio said in a statement on Tuesday.
The move is aimed at helping the state government package the assets in case there are future plans to auction the mineral rights, Rio said. The company had hoped to bring Bunder on stream as early as 2019 and described it as one of only four new mines to enter production in the next decade. Development was hampered by delays getting environmental approvals.
“We believe in the value and quality of the Bunder project and support its future development, and the best way to achieve that is to hand over the assets to the government of Madhya Pradesh,” Arnaud Soirat, chief executive officer for Rio Tinto Copper & Diamonds, said in the statement.
The gift is the latest example of the company disposing of assets that were either shut for years or faced environmental hurdles. Rio last year donated to an independent trustee a 54 percent stake in Bougainville Copper Ltd. in Papua New Guinea, which has potential copper and gold reserves worth $51 billion. In 2014, it gave to two charities its 19 percent share in an Alaskan copper project that faced criticism from environmental groups.
The diamond deposit in India was discovered in 2004 and is located in an ecologically sensitive zone about 500 kilometers (310 miles) southeast of New Delhi. Rio said in August it had invested $90 million in the project. It’s not clear if the mine can be auctioned again, the Indian government said last year.
To contact the reporter on this story: Swansy Afonso in Mumbai at safonso2@bloomberg.net. To contact the editors responsible for this story: Jason Rogers at jrogers73@bloomberg.net, James Poole