Diamond Industry Rio Tinto

1. Diamond Industry Rio Tinto Billy Pell Kelsey Zellner Christine Pope Meredith Woedl

2. Firm and Industry Overview

3. Rio Tinto • Exploration, production, and sales of rough diamonds • Mines: Australia, Canada, Zimbabwe, India • Antwerp: sorting and valuation • Operations • Perth • India • United States • Hong Kong

4. Rio Tinto • High health and safety standards • Commits to develop and strengthen communities surrounding its operations

5. Industry Overview • 4 Major Players • ALROSA - most profitable • De Beers - 2nd most profitable • Harry Winston Diamonds • Rio Tinto - 3rd largest in rough diamond production • 78% of production sector’s revenues • Consolidation of firms

6. Belgian Diamond Industry • Focus on high-value stones • Technology research and development • World leader in exceptional-stones • High quality stones of more than 20 carats • Reinforce Antwerp as global diamond trading center and knowledge hub

8. 2013 • Huge growth in China and India now moderated • Europe sales suffered from economic uncertainty • Diamond sales rose in U.S. and Japan

10. Industry Outlook • Projection: balanced market from 2013-2017 • Demand Increase • 2013-2017: 2.0% annually • 2018 onward: 5.1% annually • 2018: existing mines become depleted and no major deposits come online

11. Marketing Strategies

12. Marketing Initiatives • “Marketing Initiatives:” designed for retail consumers to use in their sales and marketing activities • Communicate high-quality of diamonds • 4 Marketing Initiatives • Select Diamantaire • Natural color diamonds • Mine of origin • Nazraana

13. 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

14. Natural Color Diamonds • Founded the Natural Colour Diamond Association • raise awareness about color diamonds in 2003 • Promotes Champagne, Pink, and Cognac diamonds • Strategy • create retail programs for customers that promote the sales of color diamonds • host events to educate consumers about the diamonds

15. 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

16. Nazraana Initiative • Developed more affordable jewelry under the name Nazraana • Initiative used to • encourage customers sell this more affordable jewelry in India • facilitate development of a retailer network across country that would market Nazraana

17. SWOT Analysis

18. 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 • multiple mine projects • 3rd largest in the world • Ownership of 4 Mines • Argyle in Australia - 100% • Diavik in Canada - 60% • Murowa in Zimbabwe - 78% • Bunder project - 100%

19. Weaknesses • High Debt - Alcan aluminum mine • Iron Ore supply reliant on China • Pink Diamonds • Argyle mine closing in 2020 • competitive advantage lost • Diamond segment generates the least revenues for company

20. Opportunities • Bunder Project - Madhya Pradesh, India • new diamond mine • could rank top 10 in volume and value • 7 times richer than Panna Mine - the only other one in India • expected to produce 27.5 million carats • 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 • New CEO - Sam Walsh: cutting costs, increasing efficiencies

21. Threats • Government regulations • strict laws bring high costs • environmentalist groups • New Technologies - competitors become more efficient and lower costs • Adverse Weather • New Minerals • aluminum • other minerals may be advantageous • reduced need for coal as world becomes more “green”

23. Key Takeaways • Firm and Industry • 4 Major Players: ALROSA, De Beers, Harry Winston Diamonds, Rio Tinto. • 78% of Production Sector’s Revenues • Belgian Diamond Industry focuses on high value stones and are the world leader in exceptional stones. • 6 major Diamond hubs in the world: NY, Antwerp, Tel Aviv, Dubai, Mumbai, & Hong Kong • In 2018, existing mines will be depleted

24. Key Takeaways • Marketing Strategies • Communicate high-quality of diamonds • 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.

25. Key Takeaways • SWOT Analysis • Strengths • Global Leader, diversified offerings, strong brand presence. • Weaknesses • Pink Diamonds, iron ore supply dependency • Opportunities • Bunder Project, expansion, new CEO • Threats • Gov’t regulations, least revenue for company

26. Rio Tinto - Diamonds Questions?