{"id":1190558,"date":"2020-06-16T17:36:00","date_gmt":"2020-06-16T22:36:00","guid":{"rendered":"https:\/\/www.mining.com\/?p=1027256"},"modified":"2020-06-17T05:36:00","modified_gmt":"2020-06-17T10:36:00","slug":"dominion-diamond-sues-partner-in-diavik-mine","status":"publish","type":"post","link":"https:\/\/juniorminingnews.com\/?p=1190558","title":{"rendered":"Dominion Diamond sues partner in Diavik mine"},"content":{"rendered":"

(This article was updated June 17) <\/em><\/p>\n

Canada\u2019s Dominion Diamond Mines is suing Rio Tinto\u2019s subsidiary DDMI<\/a>, its associate in the iconic Diavik mine, for alleged breach of contract and acting against the best interests of the partnership.<\/p>\n

The lawsuit<\/a>, filed on Tuesday in the Supreme Court of British Columbia, Canada, alleges that Diavik Diamond Mines, which owns 60% of Diavik, has operated the mine in a manner that shows \u201cwillful misconduct and gross negligence.\u201d<\/p>\n

Rio\u2019s subsidiary runs the Canadian Artic diamond mine, but takes regular payments from Dominion to cover the corresponding 40% share of the costs. The partners then dive up the diamonds produced at Diavik and sell them separately.<\/p>\n

\u201cDDMI has continued to maintain full operations at the Diavik mine without taking into account the disruptions to the diamond industry caused by the COVID-19 and, in particular, without taking into account Dominion\u2019s circumstances,\u201d the suit alleges.<\/p>\n

\u201cDDMI has done so knowing that Dominion has no ability to pay for such cash calls because it cannot materially monetize diamond inventories to pay for them,\u201d it notes.<\/p>\n

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Dominion Diamond, which is fighting bankruptcy, alleges DDMI is managing Diavik to the benefit of its majority owner, Rio Tinto.<\/p>\n<\/blockquote>\n<\/figure>\n

A spokesperson for Rio Tinto told MINING.COM the company would be “vigorously” defending Dominion’s “baseless claims” in court.<\/p>\n

“We regret Dominion filing what are baseless claims against us,” the source said. “We remain focused on managing the mine safely just as we continue to protect Diavik\u2019s interests in Dominion\u2019s insolvency proceedings and the jobs of the more than 1,120 people who work at Diavik.\u201d<\/p>\n

The two companies are already tangled up in separate legal proceedings relating to Dominion filing for creditor protection in April<\/a>.<\/p>\n

The diamond miner said at the time that the covid-19 pandemic had had a \u201cdevastating impact\u201d on the global diamond mining industry, particularly in the company.<\/p>\n

Dominion signed in May a letter of intent to sell its stake in Diavik mine, in the Northwest Territories, as well as the neighbouring Ekati mine<\/a> to a firm controlled by its parent company, the Washington Companies<\/a>, for $126 million.<\/p>\n

Under the deal, which is subject to a court-supervised bidding process, the privately held Montana-based conglomerate would also provide Dominion with up to $84 million in short-term debtor-in-possession financing.<\/p>\n

The Toronto-based diamond miner was hoping to reach an agreement with Rio Tinto on Diavik, which is scheduled to close in 2025, with cleanup costs estimated at $365.3 million.<\/p>\n

The global miner, however, said on Monday it did not intend to take full control<\/a> of the Canadian Arctic diamond mine.<\/p>\n

Shattered dreams<\/strong><\/h2>\n

The coronavirus pandemic squashed diamond miners\u2019 dawning hopes of a recovery in a sector already reeling from weak prices and demand since late 2018.<\/p>\n

De Beers, the world\u2019s largest producer by value, cut 2020 production guidance by a fifth<\/a> last month after earlier cancelling its April sales event<\/a>.<\/p>\n

Russia\u2019s Alrosa (MCX: ALRS), the world\u2019s top diamond producer by output, saw sales for rough and polished diamonds drop to $15.6 million. The figure stood in stark contrast to the $152.8 million the diamond miner fetched in March and the $405 million in January.<\/p>\n

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Dominion is seeking damages, costs, and a ruling that the joint venture agreement has been broken. No cash value was given in the filing.<\/p>\n<\/blockquote>\n<\/figure>\n

Lucara Diamond (TSX:LUC), another Canadian company, posted earlier this month a net loss of $3.2 million<\/a>, or $0.01 a share, for the first three months of the year.<\/p>\n

The figure was in sharp contrast with the $7.4 million in net income, or $0.02 in earning per share the miner reported in the same period last year.<\/p>\n

South Africa\u2019s Petra Diamonds (LON:PDL) recently delayed interest payments to borrow $21 million in new debt<\/a>, a crucial move to keep the company afloat.<\/p>\n

Investment banks are increasingly reluctant to extend credit to diamond producers, as inventory is not being sold and defaults are possible, analysts have warned.<\/p>\n

\u201cWe are concerned about an oversupply of rough diamonds following the reopening of economies, as a lot of inventory could potentially be flooded into the system and the market might not be able to absorb all of it, resulting in increased pricing pressure,\u201d Citi said in an early May note.<\/p>\n","protected":false},"excerpt":{"rendered":"

The Canadian miner, which is fighting bankruptcy, alleges DDMI is managing the mine to the benefit of its majority owner, Rio Tinto.<\/p>\n","protected":false},"author":8,"featured_media":0,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"site-sidebar-layout":"default","site-content-layout":"","ast-site-content-layout":"","site-content-style":"default","site-sidebar-style":"default","ast-global-header-display":"","ast-banner-title-visibility":"","ast-main-header-display":"","ast-hfb-above-header-display":"","ast-hfb-below-header-display":"","ast-hfb-mobile-header-display":"","site-post-title":"","ast-breadcrumbs-content":"","ast-featured-img":"","footer-sml-layout":"","theme-transparent-header-meta":"","adv-header-id-meta":"","stick-header-meta":"","header-above-stick-meta":"","header-main-stick-meta":"","header-below-stick-meta":"","astra-migrate-meta-layouts":"default","ast-page-background-enabled":"default","ast-page-background-meta":{"desktop":{"background-color":"","background-image":"","background-repeat":"repeat","background-position":"center center","background-size":"auto","background-attachment":"scroll","background-type":"","background-media":"","overlay-type":"","overlay-color":"","overlay-gradient":""},"tablet":{"background-color":"","background-image":"","background-repeat":"repeat","background-position":"center center","background-size":"auto","background-attachment":"scroll","background-type":"","background-media":"","overlay-type":"","overlay-color":"","overlay-gradient":""},"mobile":{"background-color":"","background-image":"","background-repeat":"repeat","background-position":"center center","background-size":"auto","background-attachment":"scroll","background-type":"","background-media":"","overlay-type":"","overlay-color":"","overlay-gradient":""}},"ast-content-background-meta":{"desktop":{"background-color":"var(--ast-global-color-5)","background-image":"","background-repeat":"repeat","background-position":"center center","background-size":"auto","background-attachment":"scroll","background-type":"","background-media":"","overlay-type":"","overlay-color":"","overlay-gradient":""},"tablet":{"background-color":"var(--ast-global-color-5)","background-image":"","background-repeat":"repeat","background-position":"center center","background-size":"auto","background-attachment":"scroll","background-type":"","background-media":"","overlay-type":"","overlay-color":"","overlay-gradient":""},"mobile":{"background-color":"var(--ast-global-color-5)","background-image":"","background-repeat":"repeat","background-position":"center center","background-size":"auto","background-attachment":"scroll","background-type":"","background-media":"","overlay-type":"","overlay-color":"","overlay-gradient":""}},"footnotes":""},"categories":[2849,369,4,2640],"tags":[],"_links":{"self":[{"href":"https:\/\/juniorminingnews.com\/index.php?rest_route=\/wp\/v2\/posts\/1190558"}],"collection":[{"href":"https:\/\/juniorminingnews.com\/index.php?rest_route=\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/juniorminingnews.com\/index.php?rest_route=\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/juniorminingnews.com\/index.php?rest_route=\/wp\/v2\/users\/8"}],"replies":[{"embeddable":true,"href":"https:\/\/juniorminingnews.com\/index.php?rest_route=%2Fwp%2Fv2%2Fcomments&post=1190558"}],"version-history":[{"count":7,"href":"https:\/\/juniorminingnews.com\/index.php?rest_route=\/wp\/v2\/posts\/1190558\/revisions"}],"predecessor-version":[{"id":1190741,"href":"https:\/\/juniorminingnews.com\/index.php?rest_route=\/wp\/v2\/posts\/1190558\/revisions\/1190741"}],"wp:attachment":[{"href":"https:\/\/juniorminingnews.com\/index.php?rest_route=%2Fwp%2Fv2%2Fmedia&parent=1190558"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/juniorminingnews.com\/index.php?rest_route=%2Fwp%2Fv2%2Fcategories&post=1190558"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/juniorminingnews.com\/index.php?rest_route=%2Fwp%2Fv2%2Ftags&post=1190558"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}