"The Australian Competition and Consumer Commission will not intervene in the proposed acquisition of Ashton Mining Limited by either Rio Tinto or De Beers Centenary AG", Acting ACCC Chairman, Mr Allan Asher, said today.
On July 31 2000 De Beers, the world's largest diamond mining company, announced a takeover offer of $1.62 for each share of Ashton Mining. Rio Tinto announced a counter bid of $1.85 per share on 29 August 2000. Ashton Mining's principal asset is an effective 40.1% interest in the Argyle Diamond Mine Joint Venture in Western Australia. Rio Tinto is the other major party to the joint venture and its share represents its only current operational diamond project.
The Argyle Mine produces 5% of the world's diamonds by value or 26% by volume. More than 95% of Argyle's output of rough diamonds is taken offshore to Europe and sold through the Argyle European Selling Office. As most of the production is exported there is no substantial market for rough diamonds in Australia. Very few of the polished diamonds sold in Australia are sourced from Argyle production. It is estimated that as little as 2-3% of diamonds sold at the retail level in Australia are Argyle sourced.
"The ACCC conducted extensive market inquiries, contacting market participants, overseas competition authorities, government and a range of other interested parties. In the course of its market inquiries, the ACCC examined both the national and global markets for the sale of rough diamonds.
"The ACCC's inquiries found that market participants consider the market for rough diamonds to be global and the majority of sales occur in Europe. The ACCC concluded that there is unlikely to be a substantial lessening of competition in any substantial market in Australia".