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Business Reporter
GLOBAL resources group Rio Tinto says it will retain its interest in the Zvishavane-based Murowa Diamond Mine after the company reversed a decision to dispose of its diamonds business. RioTinto offered to sell its diamond operations in March last year following a sharp decline in mineral prices amid concerns about the Eurozone crisis that stifled demand on the global market.
The group which owns 78 percent interest in Murowa said it was calling off the proposed $1,3 billion sale of its operations in Australia, Canada and Zimbabwe because buyers had failed to meet the group’s asking price.
Rio Tinto chief executive Mr Alan Davies in a statement said it had been resolved that to generate maximum value for their shareholders, the best option was to retain the gems unit.
“After considering a number of alternative strategic ownership options it is clear the best path to generate maximum value for our shareholders is to retain these businesses.
“The medium-to-long-term market fundamentals for diamonds remain robust, fuelled by growing demand for luxury goods in Asia and continuing strong demand in North America,” he said.
Last year, the group’s diamond business recorded a $43 million loss in 2012, down from a profit of $10 million in 2011.
After the announcement to dispose of diamond operations, the Zimbabwe Stock Exchange-listed company RioZim, which owns 22 percent stake in Murowa, indicated its interest in taking over majority control of the local operation.
Murowa has agreed a deal with Government in line with compliance with the Indigenisation and Economic Empowerment Act.
The Act requires foreign-owned entities whose net turnover exceeding $500 000 a year to cede 51 percent shareholding to indigenous Zimbabweans.
Online Reporter