EU studying options in De Beers-Alrosa deal

By JCK Online Staff -- JCK Online, 11/8/2004 2:00:00 AM

The European Commission said Monday it was examining proposals filed last week by diamond giants De Beers and Alrosa over their multibillion-dollar diamond sales deal which regulators worry could violate EU antitrust rules, The Associated Press reports.

European Union investigators have warned the 2001 deal would eliminate De Beers' biggest competitor, Russian state-owned Alrosa. Under the 2001 deal, Alrosa sells half its production to De Beers, the AP reports.

The EU has suggested the two groups limit the number of gems they trade under that pact.

"Last week, they made proposals to resolving the concerns," EU spokeswoman Amelia Torres reportedly said. She reportedly refused to comment on whether the EU was satisfied, saying only that the next step was to confer with other diamond producers and marketers.

The EU head office widened its probe last year, after saying a preliminary study found the deal to be a "breach of EU competition rules."

Alrosa is Russia's only diamond mining company and the world's second largest rough diamond producer, after De Beers, an Ango-South African concern.

Under the deal, Alrosa would sell $4 billion in diamonds to De Beers over a five-year period, equivalent to half its annual production.

EU antitrust regulators have said the deal would restrict fair competition by shutting out any other potential players in the Russian diamond industry.

The Commission said other parts of the world diamond industry - in Angola, Australia, and Canada - were "very fragmented."

De Beers controls about 60% of the world's rough diamond supplies and produces 43% of world output.