SYDNEY: The world's largest miner BHP Billiton on Wednesday said it was exiting the diamond industry, selling its Canadian assets to retailer Harry Winston Diamond Corp. for US$500 million.
BHP had an 80 percent stake in the remote EKATI diamond mine, some 200 kilometres (120 miles) south of the Arctic Circle which produces more than three million carats of rough diamonds a year.
The company said it was offloading the assets as part of its strategy to only invest in large, long-life, expandable projects.
"We are very proud of EKATI's track record and the substantial value it has created for the region and our shareholders," said BHP Billiton Diamonds president Tim Cutt.
"Harry Winston has long experience in the Canadian diamond industry and their commitment to study further development at EKATI could help extend the mine's contribution to northern Canada for many years to come."
Mining analyst Jeff Largey told Dow Jones the price tag was at the bottom end of value estimates.
"We never thought it was an asset worth billions of dollars. The price is probably at the lower end of our valuation range," he said.
BHP's decision followed a review of the diamond business launched last year, with the Anglo-Australian miner deciding that there was limited ability to expand given the scarcity of large deposits worldwide.
"Together with the recent sale of our interests in Richards Bay Minerals (mineral sands) and Yeelirrie (uranium), the sale reflects our ongoing pursuit of a simpler business," BHP chief executive non-ferrous Andrew Mackenzie said.
The company sees its future core assets being iron ore, coal, copper, petroleum and potash.
Completion of the deal is expected in the first quarter of 2013 and follows BHP last December agreeing to sell its 51 percent interest in the Chidliak diamond exploration project, also in Canada, to Peregrine Diamonds.
The company's share price was fractionally higher at Aus$33.78 in afternoon trade. (AFP)
