The transaction, scheduled to close in July, is expected to create $515 million in cost-savings over about two decades of production.

The Russian finance ministry has agreed with diamond producer Alrosa to purchase part of the company's production.

Local residents reported a lack of clean drinking water.

Tianqi last week raised concerns over transparency in the firm's talks on a partnership with state copper producer Codelco.

Under the agreement, initial production from Crean Hill would be shipped to Vale's Clarabelle mill in Sudbury for processing.

The production will be supported by high-grade ore from Phase 7 at its Batu Hijau mine.

Star Diamond now owns 100% of the project in central Saskatchewan.