Harry Winston’s acquisition of the Ekati diamond mine seems like pretty good news. Winston was definitely one of the trade-preferred suitors, given the substantial nervousness about an outside investment company coming in.

But more important, many feel that the Ekati mine, officially set to shut down in seven years, still has considerable upside. But that potential requires investment—and that investment, it’s safe to say, wouldn’t have come from BHP, which has money earmarked for more profitable sectors. So it’s great to see this asset in the hands of a company that wants to make the most out of it.

As for Winston, it has indicated, pretty clearly, that it wanted another mining asset, and it is now a far bigger force in the diamond production side. Still, not everyone believed it could cobble the money together to buy another mine. It appears to have done just that, even if it is taking on quite a bit of debt in the progress. (This does make you wonder if those reports of its retail arm up for sale were being floated as a Plan B in case its banks didn’t come through.)

One important note: While Winston owns a 40 percent share of the Diavik mine, it doesn’t operate it. This marks the first time Harry Winston will actually run a mine. It’s no accident it’s retaining most of the mine’s current staff.

That includes BHP’s Antwerp marketing department, which sells its product by tender, a process that has a few fans—as well as a few detractors—in the industry. And it is unclear whether Winston will continue that system, since Winston doesn’t tender its products now. (The company said it won’t comment on future plans until the 60-day period for its partners’ right of first refusal has ended.)

It’s also unclear what all this means for the other big miner looking to leave the business: Rio Tinto. The majority ownership of Diavik is one of the Rio Tinto assets up for sale, and Winston would seem a natural candidate to buy the rest, especially since it has the right of first refusal on any sale. And as Ekati and Diavik are pretty close by—though separated by a river—there may be certain operating synergies that could be realized by running two mines, so near to each other. (And those synergies can’t be realized under the current arrangement, as Winston isn’t the mine’s operator.)

Still, the debt-funded purchase of Ekati could tie Winston’s hands. It was impressive that Winston raised the money for one mine. But two? And could a company that has never operated a mine before now run a pair?

If Winston declines to go after Diavik, that could leave the Rio Tinto Diamonds group free to be spun off as its own, perhaps publicly financed, entity. Of course, it’s not a great time for IPOs. But if that is how things play out, then BHP and Rio’s exit from the business, which once promised dramatic change, may not be so earth-shaking after all.

Rob Bates

JCK News Director