Rio Tinto walks away from India Bunder diamond project

The company, which spent almost $120 million on the project located in the Indian state of Madhya Pradesh, had planned to invest an extra $500 million to develop it.

While Bunder (monkey in Hindi) remains a top-class diamond deposit, Rio said it is not a priority for the company any longer, adding that it will work with the local government to examine options for another investor to take over it, according to an e-mailed statement, quoted by Bloomberg.

The touted project, discovered in 2004, was expected to generate about 30,000 jobs and produce up to 3 million carats a year, according to Rio’s website.

When and if operational, Bunder will be one of the only four diamond mines that are likely to be in production over the next decade.

Indian diamonds are known for their quality. (Diamonds recovered a Bunder, courtesy of Rio Tinto)

Indian diamonds are known for their quality, particularly those from the ancient Golconda mines, famous for producing a rare kind of extremely clear gems. One of them is the historic Archduke Joseph diamond, one of the world’s most famous and rarest gems from Europe’s aristocracy, which sold for $21 million in Nov. 2012.

The South Asian nation was the only diamond producing area in the world during the 18th century, when Brazil began developing a few mines. The trend was followed by South Africa in 1867 and then Australia, Russia and Canada.

Rio’s decision to abandon Bunder is part of the company’s strategy to cut costs and conserve cash. The moves leaves it with only two diamond operations — Argyle in Australia and Diavik in Canada.