Rio Tinto approved a $350 million expansion at its Diavik diamond mine, 185 miles northeast of Yellowknife, Canada, capital of Canada’s Northwest Territories.
Rio Tinto operates the mine with with Dominion Diamond Corp. , and said the move demonstrates its confidence in future demand for diamonds, The Wall Street Journal reported.
Rio Tinto said the development project at its Diavik Mine involves construction of a fourth pipe, known as A21, that will help the miners sustain diamond output from the operation. More than 7,000 carats of diamonds were produced from the mine site in 2013.
Diavik’s diamond reserves are contained in solidified volcanic pipes of kimberlite, which the miner tunnels through the Earth’s crust to reach and extract the diamond ore.
The Diavik Mine has been running since 2003 and produces diamonds for high-end jewelry in all major consumer markets around the world, Rio Tinto said. Currently, the mine is due to operate until 2023.
Production from the new pipe is forecast to begin in late 2018.
“Our decision to invest in the Diavik A21 project reflects our strong confidence in the diamond sector and in our ability to compete effectively in the industry,” Rio diamonds and minerals Chief Executive Alan Davies said in a filing to the Australian Securities Exchange.
The Diavik Joint Venture is 60 percent owned by Rio Tinto, with Dominion Diamond owning the remaining 40 percent.