Rio Looking To Form Russian Diamond Partnership

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Rio Tinto, the world's second-largest mining company, is looking to bolster its presence in the diamond business through a partnership with Russia's state-run diamond miner, Alrosa, in an effort to meet rising demand for the pricey gems from emerging markets, including China.

Rio (RIO), which is more well-known for its mining of iron ore, coal, copper and other industrial metals, is also an active gold and silver miner. Diamond market sources say the company is believed to be a finalist to form a venture with Alrosa to develop a large deposit near the northern port of Archangel, according to the Financial Times.

Rio currently does not do business in Russia. The company produced 13.8 million carats last year, well below the 34.3 million produced by Alrosa, the FT reported. Rio has been mining diamonds for nearly four decades and has mines in Australia, Canada and Zimbabwe.

Rio is the world's second-largest iron ore producer. BHP Billiton (BHP) is the world's largest mining company.