De Beers Rejects African Diamonds Allegations

In response to African Diamonds’ declaration of dispute in its Shareholder Agreement on the AK6 area in Botswana, De Beers has stated that it would be irresponsible to develop a mine while knowing there is not enough available power and added that, in the face of legal proceedings, De Beers will defend its position.

African Diamonds stated last week that it and Wati, a private Botswana company with a 1 percent stake in the project, were happy to accept the term of the mining license on AK6, received from the government of Botswana in June, but that De Beers was not. De Beers, it said, wished to delay the project due to power supply concerns, an issue rejected by “the other partners.”

The AIM-listed mining firm also stated that it had offered to buy out De Beers, with the aim of “develop[ing] the mine in line with the timetable submitted to the government.”

De Beers’ statement in response detailed its power supply concerns, saying that, while it would like to see AK6 come into production as soon as possible, the “substantial 30 percent reduction in supply of power by Eskom to Botswana over the next three to four years” would affect the “critical phases in the development of the AK6 mine.”

De Beers also stated that it is “inaccurate and misleading to say that Wati is supportive of African Diamonds’ position…They are not.”

In African Diamonds’ statement, it said that “one of the terms of the mining license requires the diamonds from AK6 to be auctioned in Botswana” and that “the revenue from an auction process may be up to 40 percent greater than that estimated by De Beers.”

De Beers responded to this, saying that “it is important to note that the claim that significantly higher prices could be achieved by auctioning diamonds in Botswana is fundamentally false, and demonstrates a worrying lack of experience with diamond distribution and valuation.”

African Diamonds Chairman John Teeling commented, “We will build an efficient, effective, reliable mine cheaper than the De Beers model. By auctioning the diamonds we will obtain prices up to 40% higher than those estimated by De Beers. The economics are not in doubt. It makes no sense to African Diamonds, our local partner Wati or to the people of Botswana that the benefits from developing the mine should be denied. We have declared a dispute and will go to arbitration in Botswana."