South Africa’s Department of Minerals and Energy and De Beers entered into a joint venture that both parties are calling “a new era of cooperation aimed at creating an even more empowered and sustainable diamond mining and exploration industry” in the country.
Under the terms of the agreement announced Friday by officials representing both groups, the West Coast operations of Alexkor and De Beers Consolidated Mines’ Namaqualand Mines will be merged into a new, stand alone diamond mining company. Both parties say that this new independent company will be positioned to capitalize on synergies that exist across both operations and will realize the full economic potential of the country’s west coast diamond mining industry. As a first step in this process, De Beers will issue, through a special purpose vehicle, a 20 percent stake in its Namaqualand Mines to the DME.
The combined mine operation is expected to be completed in 2008. At that time, the option of a listing would be considered by the operator of this new company. Under the agreement, De Beers’ will dilute its stake over time.
Furthermore, as part of the agreement, De Beers will make its management, technical expertise, and assets available to the DME for the next three years to speed the start up of the State Diamond Trader.
“Throughout our global operations, De Beers’ competitive advantage is in our ability to engage in real and lasting partnerships with governments, ensuring that diamonds continue to help diamond producing countries, like South Africa, to build a more prosperous future for themselves,” said Nicky Oppenheimer, chairman of the De Beers Group.
“This announcement represents an important step forward for the communities along the West Coast, the people of South Africa and De Beers who will all benefit from a consolidated mining operation founded in the spirit of partnership,” said Buyelwa Sonjica, South African minister of Minerals and Energy.
David Noko, managing director of DBCM added, “In addition to our growth strategy, we intend to accelerate our transformation drive and continue to contribute to the development of a sustainable diamond industry in South Africa. This agreement will provide real opportunities for a new BEE company in the diamond sector to help meet Government’s aspirations for a transformed South African diamond industry.”