diamond recovery

The diamond sector is beginning to emerge from a rough patch, with production of the world's most popular gem increasing on the back of improved market conditions.

Mining giant Rio Tinto Ltd last year scaled back its diamond mining in Western Australia and Canada in response to the economic slow down, but output is now on the rise.

Rio Tinto saw the market turmoil as a good opportunity for it to shut processing facilities at its Argyle diamond mine, about 2,500km north-east of Perth, for maintenance in the second quarter of 2009, reducing diamond production.

It also slowed down an underground expansion of Argyle, resulting in lower workforce numbers.

On Wednesday Rio Tinto said it had resumed normal production at Argyle, where output in the second quarter of 2010 jumped 538 per cent to 2.6 million carats compared to the same period in 2009.

Rio Tinto last year scaled back operations at its Diavik mine in Canada, but reported on Wednesday a 13 per cent increase in production at the project to 967,000 carats.

All eyes will be on the next report from De Beers, the world's largest diamond miner, for further signs of renewed health in the global diamond sector.

De Beers posted a net loss last year after temporarily shutting all its operations under its "comprehensive recession action plan" announced in late 2008, which led to 23 per cent of staff axed and marginal mines sold.

De Beers chairman Nicky Oppenheimer had invoked the adage "never waste a good crisis", viewing the global financial crisis as an opportunity to re-think and reorganise the business.

Mr Oppenheimer earlier this year said he believed the long-term fundamentals of the diamond industry were promising amid growing demand from Chinese and Indian markets while known supplies were diminishing



LETS HOPE THEY FIND THE MOTHERLOAD!