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| August 2001
Diamonds/News De Beers Suspends Operations in Angola The mining giant tried to resolve problems for almost a year Citing an impasse in negotiations with Angola, De Beers suspended all operations and investments in the West African nation in May. In August 2000, De Beers Chairman Nicky Oppenheimer met with Angolan President José Eduardo Dos Santos to express the company’s long-term commitment to Angola and discuss the possibility of freezing a loan De Beers made to Endiama, the state-run diamond company. De Beers says it was looking for a new contract with Endiama to mine and market diamonds from kimberlite pipes in northeast Angola. But De Beers spokespeople say the legal status of the company’s investments and any guarantees regarding past and future investments became increasingly uncertain over the past year. This History In April 1991, De Beers loaned $50 million to Endiama at Angola’s request to help finance the development of the mining area in the Cuango Valley. It was agreed all diamonds produced in the diamond-rich area would be marketed through De Beers. Endiama later reported a number of setbacks in its operations there, and mining was suspended from 1992 until 1998. In 1998, SDM – the company with the legal mining title to the area – resumed marketing diamonds through De Beers. That arrangement was short-lived also. In February 2000, Angola suspended all contracts previously signed with Endiama. SDM awarded its production for marketing to another private company, Ascorp, which has close connections to the Angolan government. De Beers says it complied with all agreements it made with Angola, including construction of a $30 million state-of-the-art diamond sorting facility in Luanda, the nation’s capital. The building was completed in November 2000. Since the August meetings with President Dos Santos and with the Ministry of Geology & Mines, De Beers says there has been no progress in reaching an agreement. “We have invested $30 million in prospecting alone,” says Andrew Lamont, a De Beers spokesman. “Without security of tenure, there are no legal guarantees, though we continue to hope we can eventually bridge this impasse.” For now, however, De Beers says it can’t justify continued investment. A few weeks after De Beers made its announcement, the government of Angola told the world press it was still trying to persuade De Beers to resume operations. The government says De Beers didn’t pursue all means to resolve the disagreement. – by Robert Weldon, G.G.
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