The Australian reports that diamond mining giants BHP Billiton and Rio Tinto are considering a $1 billion merger of their Canadian diamond operations.



The newspaper states that BHP has dispatched employees to Canada to investigate how the two companies could merge their diamond mines, which abut each other.



The mines are located northeast of Yellowknife. BHP's Ekati diamond operation recorded an annual EBIT of $59 million in its recent earnings while Rio's Diavik diamond mine recorded a first-half loss of $56 million.



The two major diamond companies butted heads during BHP's attempted $135 billion takeover bid of Rio Tinto but since then have teamed up to develop the $116 billion iron ore joint venture in the Pilbara.



The two companies already operate a joint venture at Chile's Escondida copper mine, in which BHP is the majority holder with 57.5% interest.