SA, De Beers form BEE diamond firm
The two partners said the firm would be a joint venture between government mining group Alexcor and De Beers’ Namaqual mining operation owned by the South African arm of De Beers.
De Beers chairman Nicky Oppenheimer said an independent valuation of the two companies’ assets would take place before the creation of the new company.
He said the new firm was “going to be a serious diamond player” both within the country and on the international market. , and would later be listed on the Johannesburg Stock Exchange.
“This independent and empowered company will be well-positioned to capitalize on synergies that exist across both operations and will realize the full economic potential of the west coast diamond mining industry,” a statement issued by the two parties said.
The formation of the new firm is expected to be complete “sometime in 2008”, though both parties have agreed that the company will operate along South Africa’s northwest coast, where both the South African government and De Beers have been mining for several years.
De Beers said it would contribute a 20 percent stake in Namaqualand mines, a subsidiary of its South African operation, which produced one million carats last year. The company said it would not operate the new joint venture operation, and would gradually dilute its stake.
Market watchers believe the deal was partly aimed at calming government pressure for De Beers to increase its involvement in the government’s BEE plan.
South Africa’s mining charter requires companies to sell at least a 26 percent stake in local operations to black South Africans by 2014 and was set up to redress the inequities of the apartheid era.
The BEE programme is expected to improve the economic fortunes of South Africa ‘s previously marginalised black community, for which the government has now pledged to provide economic support.
De Beers concluded a 3.7-billion-rand deal last year to bring black investors into its South African business unit, after the South African government insisted the company increase its role in empowering the indigenous black community.
The stake was purchased by empowerment firm Ponahalo Holdings whose ownership is split 50/50 between De Beers staff and pensioners and a black investment firm called Ponahalo Capital.