Buying a diamond is the ultimate in discretionary spending.

So it should be no surprise that with the world's worst financial crisis since the Great Depression in full swing, sales of both rough and cut diamonds have plummeted.

As many as 300 workers at Rio Tinto's Argyle mine in Western Australia's remote Kimberley region have just discovered that hard truth.

The mining contractor to Rio and Argyle, Macmahon, spent yesterday telling the workforce — it has the highest indigenous representation of any mine in Australia at 25 per cent — that the operation was about to get considerably smaller, reducing annual output from 20 million carats to about 15 million.

More ominous was Rio's decision to adopt a go-slow approach on a $US1.5 billion ($A2.2 billion) life-extending move to begin mining Argyle's billion-year-old diamonds from an underground position, with the existing open-cut operation now on its last legs.

Debt-ridden Rio stressed its need to conserve cash under its $US10 billion debt-reduction target for 2009, as well as the "current global conditions".

Rio did not say so but industry participants have reported that the trade in rough and polished diamonds in the all-important US market tanked in the second half of 2008 as the global financial crisis took hold.

Argyle — the world's biggest diamond mine by volume but not by value because of the relatively low quality of its stones — is the single-biggest contributor to the Kimberley economy and is the major supplier of low-value rough diamonds to India's huge cottage-based diamond cutting and polishing industry.

The move to underground operations was given the go-ahead by Rio in late 2005 and meant that Argyle stones, including the world-famous $US500,000-plus a carat "fancy pinks" that make up a small percentage of its production, would continue to be produced until at least 2018 on the exhaustion of the open-cut diamond resource in the AK1 kimberlite pipe.

Before that 2005 commitment was made, Rio extracted a deal on royalty relief (down from 7.5 per cent to 5 per cent of revenue) and the waiving of secondary processing obligations (fancy pinks would still have to be cut and polished in Perth) from the WA Government.

The plan now is to mine some extensions to the open-cut resource for at least two years and hope that the diamond market bounces back sufficiently to warrant a full-blown move to underground mining.

Average annual production over the life of the underground mine was expected be about 60 per cent of Argyle's historical annual average of 34 million carats.

The quality of the rough stones is expected to be similar, with a value of about $US10 a carat. That low average value compares with gem-quality rough stone values of more than $US150 a carat.

Only 5 per cent of Argyle's output is of gem quality.

The job losses in the Australian mining industry has gone from a trickle to a spurt to a gush.

Thousands of workers have been laid off across the country.

Now it's not just miners on site who're likely to lose their jobs, big city head offices are also being culled.

The job losses started around the middle of last year when commodity prices nosedived, and they just kept on coming.

Then three weeks before Christmas the worlds third largest miner, Rio Tinto, announced plans to shed 14,000 workers.

And although the company has gone public with cuts of mainly contract workers, it's remaining tight lipped about head office job losses.

The ABC's been told some 200 people will be made redundant within weeks, most of them in office jobs in Perth.

Rio Tinto wont confirm or deny the figure and plans to keep details under wraps until it posts full year results in February.

Research analyst, with Ord Minnett Peter Arden, says it's a sign the global downturn is getting rapidly worse.

Small businesses in mining towns across the nation are being squeezed as their customers disappear.

Tom Price is an iron ore town in outback Western Australia.

Hardware store owner there Greg Musgrave says the bad situation is being made worse because mining companies aren't communicating with them.

Unwanted dumping has lead the Mineral Village Board to close its recycling center. The recycling center was designed for the residents of Mineral, with receptacles labeled glass, aluminum cans, broken down cardboard, and newspaper and other recyclable items.

Lately, village officials say, it has become the site of unwanted dumping.
People from outside the area have been seen depositing trash at the center. Proof has been found that residents of neighboring towns are using the center through address labels from mail, catalogs and other identifications.

To add to the headache, a new quote for recycling pick up has more than doubled in price.

“It has gotten out of hand,” said Mayor Glenn Morey. “It leaves us with no choice but to close the center.”

The Mineral Recycling Center will be closed Feb. 1. As of that date, anyone dumping at the site will be fined $500.

In other business, bids were reviewed from several area firms for household garbage pickup. Almost all bids were more than double the current rate of $7 per month.

A bid from Illinois Valley was accepted with a monthly charge of $13.28 per household.

The board agreed to set the garbage pickup at $40 every three months and water usage from $46.50 to $50 every three months. With these increases, curbside recycling was vetoed. The board then decided to increase the number of pickup tags from 13 to 26 allowing another bag to be placed at the curb each week.

The village board also reminded Mineral residents that dry, readily combustible material can be burned from 7 a.m. to sunset daily.

Research and Markets has announced the addition of the "Norilsk Nickel (GMKN) Update Report" company profile to their offering.

At least 3 years of history are available for most ratios. Additionally, information on business segments, competitors and future outlook are provided. Information on competition includes short overview of competitive situation in the market, comparison of key stats and description of competitors. Also future plans and strategy of the company is covered in this report. Conclusion contains opinion of our analyst on company's performance, business risk and growth possibilities providing reader with necessary information to make decisions.

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- Report contains only relevant information, leaving out excessive data.
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MMC Norilsk Nickel benefits from its large, high-grade reserve base, which supports massive production, product diversity, and low costs. On the other hand, the decrease of nickel price, decrease of demand on nickel from China and other giant consumers of this metal have a negative influence on Norilsk Nickel's activity.

Nickel fell in London, erasing an earlier gain that took the metal to a record, on speculation growth in global demand for stainless steel will slow. Lead rose to its highest ever.

Stainless-steel production will expand 8 percent this year, from 13.2 percent in 2006, Michael Widmer, director of metals research at Calyon, said by phone from London today. Nickel has gained 19 percent this year on expectations of strong demand from China, the world's largest producer of stainless steel. The alloy is the largest end-use for nickel.

The rebuilding of inventories by consumers ``is over and slower economic growth, particularly in the U.S., will slow demand for stainless steel,'' Widmer said. ``This is one reason we expect that upward pressure on nickel prices will be alleviated in the coming months.''

Nickel for delivery in three months on the London Metal Exchange slipped $50, or 0.1 percent, to $39,800 a metric ton as of 6:32 p.m. local time. Earlier, it rose as much as 1 percent to $40,250, beating the previous record of $39,999 set yesterday.

Inventories monitored by the LME fell for a second day by 468 tons, or 11 percent, to 3,930 tons, the exchange said in a daily report. Stockpiles have slumped 41 percent this year.

Lead, used in car batteries, rose $20, or 1.1 percent to $1,850, beating the record set yesterday by $5. Inventories tracked by the LME have fallen 55 percent in the last 12 months to 32,525 tons.

Tin Advances

Tin increased $395, or 2.9 percent, to $13,890 a ton. Earlier it traded at $13,900, the highest since at least 1989 according to Bloomberg data, beating the 17-year high set yesterday by $400.

Malaysia Smelting Corp. said in a statement today that it plans to resume tin sales at its Indonesian unit, PT Koba Tin, before April after local police probing possible illegal sales of tin ore arrested three directors of the division.

Tin supplies will fall short of demand by about 30,000 tons in 2007 because of reduced output in Indonesia, the world's second-largest producer after China, U.K. consulting companies ITRI Ltd. and CRU said on Feb. 19.

The Indonesian government plans to tighten export regulations and crack down on illegal mining. Tin miners have until tomorrow to register for the right to export the metal from Indonesia. Only seven applications had so far been received, Diah Maulida, director general of foreign trade at the Ministry of Trade, said today.

Among other LME-traded metals, copper rose $170, or 3 percent, to $5,890 a ton, aluminum gained $40 to $2,782 and zinc increased $75 to $3,400.

To contact the reporter on this story: Brett Foley in London at bfoley8@bloomberg.net

source news : bloomberg.net