KKR is Looking To Invest in Diamonds – New Mining Giant May Rise

April 19th, 2012 by Noam Flint

About a month ago, RIO Tinto, a mining giant and one of the world’s largest diamond mining companies announced that they may put their diamond mining business up for sale, including the world’s most famous pink diamonds mine – the argyle diamond mine. This announcement followed only months after their competitor, BHP Billiton announced the same thing. Both companies stated they want to stay focused on their core businesses of iron, ore and copper while their 2 Billion Dollars diamond mining taking “only” about 2% of their businesses and are not worth the efforts.

Since then, KKR – a private equity fund based in America, is hatching an ambitious plan to purchase the mines of both companies and establish a new mining company, a new giant if you wish, that will be the third largest diamond mining company in the world after De-Beers and Alrosa (Russia’s largest mining company).

It is still uncertain whether KKR wishes to buy all of the mines of a selected few and how much they are willing to invest. Bids will be revealed next month. Another known candidate that might bid is Harry Winston.

Diamond prices have increased in the last few years and since the assumption is that the consumption of diamonds will only increase due to the increasing demand from countries such as China and India are probably the reasons for hedge funds looking for new ways to be investing in diamonds.