De Beers will sell its 27% stake in a vast undeveloped diamond field in Russia's Arctic. According to the Itar-Tass news agency, a De Beers spokesman said the worsening of the investment climate in Russia prompted the decision.
The move spells a write-off by De Beers of about $30 million as an unrecoverable investment in Russia's Severalmaz and Terra joint-stock companies.
De Beers will sell its stake in Severalmaz, a Russian company owning rights to develop the Lomonosov deposit in the Arkhangelsk region, to the Russian diamond monopoly Alrosa, said the Interfax news agency, which cited a joint statement from the companies.
The report did not give the stake's value, but said the companies signed a protocol agreeing to the sale in London on May 4.
The Lomonosov deposit, located in a remote and poorly developed area of Arctic forest in northwest Russia, is considered one of the world's largest untapped diamond reserves, with an estimated $12 billion worth of gems and industrial stones. Yet plans to develop the deposit have stalled for many years.
Russian media had speculated before the sale that De Beers bought the stake to intentionally halt production and prevent an oversupply of diamonds in world markets.
Vyacheslav Shtyrov, president of Almazy Rossii-Sakha, was quoted earlier saying "De Beers has no interest in diamond extraction in the region" and its strategy was "to keep the Lomonosov deposit in store and carry out endless geological prospecting work" there.
De Beers has said it worked in good faith to bring the field into production. The report did not say why the company decided to sell the stake.
- by Mark E. Dixon