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Published byAmanda Berry Modified over 9 years ago
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Diamond Industry Rio Tinto Billy Pell Kelsey Zellner Christine Pope Meredith Woedl
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Firm and Industry Overview
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Rio Tinto ● Exploration, production, and sales of rough diamonds ● Mines: Australia, Canada, Zimbabwe, India ● Antwerp: sorting and valuation ● Operations o Perth o India o United States o Hong Kong
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Rio Tinto ● High health and safety standards ● Commits to develop and strengthen communities surrounding its operations
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Industry Overview ● 4 Major Players o ALROSA - most profitable o De Beers - 2nd most profitable o Harry Winston Diamonds o Rio Tinto - 3rd largest in rough diamond production ● 78% of production sector’s revenues ● Consolidation of firms
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Belgian Diamond Industry ● Focus on high-value stones ● Technology research and development ● World leader in exceptional-stones o High quality stones of more than 20 carats ● Reinforce Antwerp as global diamond trading center and knowledge hub
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2013 ● Huge growth in China and India now moderated ● Europe sales suffered from economic uncertainty ● Diamond sales rose in U.S. and Japan
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Industry Outlook ● Projection: balanced market from 2013-2017 ● Demand Increase o 2013-2017: 2.0% annually o 2018 onward: 5.1% annually ● 2018: existing mines become depleted and no major deposits come online
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Marketing Strategies
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Marketing Initiatives ● “Marketing Initiatives:” designed for retail consumers to use in their sales and marketing activities ● Communicate high-quality of diamonds ● 4 Marketing Initiatives o Select Diamantaire o Natural color diamonds o Mine of origin o Nazraana
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Select Diamantaire Programme ● Promotes Rio Tinto’s Diamonds’ core customers who are considered experts ● Used as a “Mark” of formal recognition - promotes high quality of diamonds ● Those in program get their own tailored marketing materials and events
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Natural Color Diamonds ● Founded the Natural Colour Diamond Association o raise awareness about color diamonds in 2003 ● Promotes Champagne, Pink, and Cognac diamonds ● Strategy o create retail programs for customers that promote the sales of color diamonds o host events to educate consumers about the diamonds
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Mine of Origin ● Keeps track of which diamonds come from which mines ● Prevents issues over origin or quality of diamonds ● Program helps to attach human, geographical, and cultural stories to diamonds ● Focuses on adding meaning to end consumer’s purchase so retailers can use it as a marketing vehicle
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Nazraana Initiative ● Developed more affordable jewelry under the name Nazraana ● Initiative used to o encourage customers sell this more affordable jewelry in India o facilitate development of a retailer network across country that would market Nazraana
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SWOT Analysis
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Strengths ● Global Leader - up to 90% of world’s pink diamonds ● Diversified Offerings - Color, Carat, Clarity, and Cut ● Industry leading technology ● Strong Partnerships ● Strong brand presence ● Rising Urbanization and Living Standards ● 20% of world’s diamond production o multiple mine projects o 3rd largest in the world ● Ownership of 4 Mines o Argyle in Australia - 100% o Diavik in Canada - 60% o Murowa in Zimbabwe - 78% o Bunder project - 100%
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Weaknesses ● High Debt - Alcan aluminum mine ● Iron Ore supply reliant on China ● Pink Diamonds o Argyle mine closing in 2020 o competitive advantage lost ● Diamond segment generates the least revenues for company
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Opportunities ● Bunder Project - Madhya Pradesh, India o new diamond mine o could rank top 10 in volume and value o 7 times richer than Panna Mine - the only other one in India o expected to produce 27.5 million carats o 20 times more production output ● expand into new markets when finances clear ● acquire new mines ● utilize strong aluminum mining and other minerals to diversify and cut costs o New CEO - Sam Walsh: cutting costs, increasing efficiencies
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Threats ● Government regulations o strict laws bring high costs o environmentalist groups ● New Technologies - competitors become more efficient and lower costs ● Adverse Weather ● New Minerals o aluminum o other minerals may be advantageous o reduced need for coal as world becomes more “green”
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Key Takeaways ● Firm and Industry o 4 Major Players: ALROSA, De Beers, Harry Winston Diamonds, Rio Tinto. o 78% of Production Sector’s Revenues o Belgian Diamond Industry focuses on high value stones and are the world leader in exceptional stones. o 6 major Diamond hubs in the world: NY, Antwerp, Tel Aviv, Dubai, Mumbai, & Hong Kong o In 2018, existing mines will be depleted
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Key Takeaways ● Marketing Strategies o Communicate high-quality of diamonds o 4 Marketing Initiatives: Select Diamantaire, Natural color diamonds, mine of origin, & Nazraana. Promotes Rio Tinto’s Diamonds’ core customers who are considered experts. Promotes Champagne, Pink, and Cognac diamonds Keeps track of the mines that diamonds come from to ensure quality of diamonds. Developed more affordable jewelry under the name Nazraana.
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Key Takeaways ● SWOT Analysis o Strengths Global Leader, diversified offerings, strong brand presence. o Weaknesses Pink Diamonds, iron ore supply dependency o Opportunities Bunder Project, expansion, new CEO o Threats Gov’t regulations, least revenue for company
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Rio Tinto - Diamonds Questions?
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