Rio Tinto sees sparkle in diamond mines Rio Tinto is devoting a small part of its much reduced capital spending budget to the expansion of one of its diamond mines. The approval of a $350m investment at the Diavik mine in Canada shows Rio's renewed commitment to the diamonds business, after it tried and failed to sell its operations last year. Diamonds have been one of the better performing sectors in mining this year, with expectations of continued consumer demand - particularly as the Chinese population starts to buy more - and a constrained supply from new mines. Rio has been slashing capital expenditure to try to restore its balance sheet to health after ill-judged investments in deals such as acquiring Canadian aluminium maker Alcan for $38bn and buying Riversdale, a Mozambican coal project. The miner's investors have also been clamouring for more returns. Rio owns 60 per cent of Diavik with Dominion Diamond owning 40 per cent. The mine is in Canada's remote Northwest Territories, close to the Ekati mine that Dominion bought from BHP in 2013. A decision on whether to expand Diavik - to mine a new diamond-bearing pipe known as A21 - had been urgently required so that production could begin in 2018, in time to replace waning output from other areas of the mine. Supplies to the mine have to be brought up an ice road that is only accessible for part of the year. Alan Davies, Rio Tinto's diamonds & minerals chief executive, said: "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." The capital expenditure will be in proportion to the partners" stakes in Diavik.