De Beers in Talks to Resume Angolan Operations

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(Rapaport…October 18, 2000) The Financial Times reports that De Beers is negotiating a deal with the Angolan government that could reestablish rights to Angolan diamonds and secure mining and marketing rights over new diamond deposits discovered by De Beers. Both sides hope to reach an agreement as soon as possible.

De Beers used to buy Angolan diamonds until last year when it faced consumer campaigns against conflict diamonds. De Beers, though, continued to buy from the official SDM mine.

In February, Angola gave all marketing rights to ASCORP (Angolan Selling Corporation), a joint venture between the state diamond company, Sodiam, and Israeli-Russian businessman Lev Leviev. The diamonds are exported and marketed through Antwerp and Tel Aviv. This move effectively pushed De Beers out, leaving them with only mining prospects in Angola.

According to the Financial Times, ASCORP has many critics who hope it can be undermined. Miners have complained about the monopoly’s low prices, and say that ASCORP has yet to prove that has stopped the flow of conflict diamonds.

Last March, De Beers launched legal action against a Leviev company in Belgium over SDM’s diamonds. A Brussels court upheld De Beers’ rights over SDM diamonds in September. De Beers also expects to gain Ashton Mining’s 33 percent stake in SDM, should it win control over the Australian mining company.

Gaspar Cardoso, chairman of De Beers Angola, stressed that De Beers is seeking a marketing deal with Sodiam, not ASCORP. Sodiam holds the exclusive rights to Angolan diamond sales. A deal between the two would result in Angola’s first official sales outside the ASCORP channel since the shakeout.

Cardoso said that De Beers has found 50 new kimberlite sites since 1998 and thinks some are diamond rich. Evaluating and mining these sites depend on reaching a global deal.

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