Charlotte Mathews
29 September 2008
Johannesburg — DE BEERS Group and its partners in the AK06 diamond deposit in Botswana, African Diamonds and Wati Ventures, expect to reach an agreement by tomorrow's deadline on going ahead with building a mine.
De Beers said on Friday talks between the parties and Botswana's government to resolve outstanding issues on AK06 were in their final stages.
Two months ago, African Diamonds said it would sue De Beers to stop it delaying development of the mine, but it said last week it put off the court case after Botswana's government did not consider De Beers' application for a retention licence.
A retention licence would have enabled the AK06 partners to develop the mine at a later date rather than decide before tomorrow.
De Beers, citing concern about power supply to the mine, wanted first production deferred to 2012-13 instead of late next year, which was the original plan supported by African Diamonds. African Diamonds offered to buy De Beers' stake in AK06, but De Beers declined to sell.
De Beers has a 71% stake in AK06, African Diamonds holds 28% and Wati Ventures has 1%. AK06 is a kimberlite pipe with an estimated 22 carats of diamonds in every 100 tons of rock at about $131 a carat. It could produce about 1-million carats a year at full production.
De Beers insisted on AK06 production being marketed via the Diamond Trading Company (DTC) Botswana rather than auctioned in Botswana under the original terms of the licence agreement. Last week, the government, which owns 50% of DTC Botswana, agreed that AK06's diamonds would be marketed via DTC Botswana, as with the other four diamond mines owned jointly by De Beers and the government through Debswana.
De Beers communications director David Prager said the marketing of AK06 diamonds was not the fundamental issue, as some outsiders thought. The real issue was, as De Beers had said before, the need to provide the mine with reliable power.
De Beers said discussions between the parties on dealing with the regional power shortage were constructive.
De Beers Group MD Gareth Penny said the government acknowledged the gravity of the power supply issue, and was looking at ways to ensure the project had a sustainable power supply.
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