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De Beers seals Angola return
David McKay
Posted: Fri, 27 May 2005
[miningmx.com] -- DE Beers is to end its four year absence from Angola unveiling today an agreement to establish exploration and marketing joint venture companies with Endiama, the Angolan government’s diamond agency. The joint ventures, in which Endiama will have a controlling 51% stake, will enable De Beers to resume exploration of Angola's Lunda Norte Province.
In terms of Angolan law on diamond prospecting, De Beers will hunt down prospective diamond-bearing kimberlites in land parcels of 3,000 square kilometres.
Exploration in Angola was suspended in 2001 after Endiama and De Beers failed to settle differences on the renegotiation of a former agreement signed in the early 1990s. The decision meant that Israeli company, the Leviev Group, had exclusive rights to market Angola’s legitimate diamond output.
As part of its dispute, De Beers was claiming repayment of a $50m
loan made to Endiama in 1991, capital that was used to finance the development of mines in the Cuango province of Angola. The debt has since accrued at least a further $40m in interest, according to a report by the BBC.
Gary Ralfe, De Beers MD, said the group had renounced its arbitrations as a precursor to reopening negotiations. "We said we would not pursue the arbirations in order to open an avenue to constructive engagement with Endiama," he said in an interview with miningmx.
The new agreement, however, provides for a joint venture that will be granted exclusive mineral rights for the mining and marketing of diamonds from economically mineable deposits, De Beers said in a statement today. “This signals a proper, global investor joining Endiama in a proper joint venture,” said Tom Tweedy, De Beers spokesman.
The joint venture between De Beers and Endiama comes at a time when the diamond market is thriving. According to James Picton, an analyst for WH
Ireland, demand for diamonds should rise by 50% from 2002’s $9bn to $14bn over the next decade. “That is more than equivalent to the combined productions of Botswana and Russia,” Picton said.
World rough diamond production from Angola totalled $1.2bn in 2004, equal to 11% of world output.
Ralfe said Angola had "a significant role to play" in meeting future diamond demand. "We will be putting important money into Angola," he said. A senior geologist at De Beers, Charles Skinner, was ready to begin prospecting there as soon as possible. "It sounded as if he had his bags packed," said Ralfe.
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