Diamond output and sales drop in first half of 2011, says Rio Tinto

Rio Tinto announced that gross diamond sales dropped to $313 million in the first six months of 2011 from $326 million in the same period a year earlier.

The miner's output declined sharply in the first six months of the year – down by 26 percent to 5.23 million carats.

The company's results showed that increased prices for rough goods helped offset some of the lower volumes.

Rio's production was affected by heavy rainfall at its Argyle mine in Western Australia, together with lower grades of diamonds mined.

The Argyle underground mine, which is forecast to have a target output of more than 20 million carats annually, is due to be ready and working in two years. Its lifespan is expected to last until at least until 2019.

Rio reported that output was steady at the Diavik mine in Canada's remote NorthWest Territories, and is expected to increase in the second part of 2011. Rio forecasts 13 million carats of rough diamonds to be produced by the end of 2011.

Earnings before interest, taxes, depreciation and amortization (EBITDA) fell by a third on the year to $50 million, while the company's diamond division reported a $10 million net loss from a net profit of $34 million in the first half of 2010.