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A Canadian diamond deal? Add to ...

Two big Canadian diamond mines may soon have one owner, as The Australian newspaper is reporting that BHP Billiton and Rio Tinto discussing a merger of the Ekati and Diavik mines.

The two global mining companies recently announced an iron ore joint venture. According to media reports, the two erstwhile rivals - BHP Billiton made an unsuccessful hostile run Rio Tinto last year - are now in talks on other projects that could be combined.

Diamonds are a sideshow at both companies, so there's no strategic roadblock to a merger. And the two Canadian mines are 30 kilometres apart, so analyst Edward Sterck at BMO Nesbitt Burns said in a report Tuesday "operational synergies are likely to exist and could lead to reduced production costs."

If there is a deal that results in synergies at the two mines, Mr. Sterck pointed out that Harry Winston Diamond , owner of 31 per cent of Diavik, "could also benefit from cost reductions."

 
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