Rio Tinto registered a 6% increase in revenue from its diamond operations during 2014 with the total rising from $ 852 mn to $ 901 mn year-on-year, the miner said while releasing its annual financial results.

EBITDA in the diamond segment was up 23% from $ 257mn in 2013 to $ 315 mn in 2014, while, in line with the overall performance of the group, net earnings from the diamond business were up significantly, rising from $ 53 mn to $ 104 mn year-on-year.

The strong financial performance was recorded even as production dropped 13% in 2014 from 16.027 mn carats a year earlier to 13.872 mn carats last year. Rio’s capital expenditure in the diamonds division reduced by 54 percent to $148 million due to lower spend on the Argyle underground mine in Australia. On the other hand, industry diamond prices moved up by 6% during 2014.

The miner said that the drop in production was on account of lower carat recovery at Argyle due to the shift from open pit to underground mining,  the increase in lower grades as underground production ramped up and a maintenance shutdown during the fourth quarter impacting both underground crushers.

Production at the 80% owned Diavik mine in Canada was in line with 2013, with improved mining rates and processing plant improvements offset by the impact of lower grades.

The development of the A21 pipe at Diavik, which was approved in November 2014, will provide an important source of incremental supply to maintain existing production levels. The development is expected to cost $350 mn, of which Rio Tinto’s share will be $210 mn. First production from this pipe is expected in 2018.

With the Argyle underground mine on track to reach full capacity in 2015, Rio Tinto’s total production is expected to touch 21 mn carats of diamonds in 2015. The shift to underground mining at Argyle is expected to increase the mine life till at least 2020.

 “The medium to long-term fundamentals for the diamond industry remain positive and are expected to support sustainable future price growth,” said the miner.