| Thu 24 May 2001, 0:00 | | De Beers Suspends Investments And Operations In An |
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DE BEERS CENTENARY AG
(Incorporated under the laws of Switzerland)
DE BEERS SUSPENDS INVESTMENTS AND OPERATIONS IN ANGOLA
De Beers has decided, with immediate effect, to suspend its investments and
prospecting operations in Angola.
It has reluctantly taken this decision following an impasse in its
negotiations with the Angolan Government; negotiations that it was hoped
would have clarified De Beers' legal rights in relation to mining and
marketing contracts and guarantees for future investments in Angola.
In 1990, the Angolan Government approved a comprehensive agreement between
De Beers and Endiama, the Angolan State diamond company. In this agreement,
De Beers embraced a commitment to provide financial and technical expertise
to contribute to the further development of the Angolan diamond industry and
the Angolan economy in partnership with the Government.
In accordance with this agreement, Endiama, on behalf of the Government
signed a number of contracts with De Beers. These contracts contained four
essential elements.
1. A U$50 million loan to Endiama to help finance the development of
diamond mining in the Cuango Valley;
2. An agreement that allowed De Beers to market the diamonds from the
Cuango;
3. A comprehensive prospecting programme, in which De Beers committed
itself to investing up to U$50 million in the search for major primary
kimberlite sources of diamonds;
4. The construction of a multi-storey diamond sorting building in Luanda.
De Beers believes that it has fully complied with its obligations under this
agreement. For example, it recently completed the construction of the
diamond sorting building, at a cost of US$30 million, and has also to date
invested some US$30 million in its prospecting activities in only one of its
three concession areas.
In addition, De Beers employs 150 Angolans in its De Beers/Endiama
partnership projects - a demonstration of the company's long-term commitment
to the training and development of Angola's human resources.
However, in February of last year, the Government decreed the suspension of
all contracts previously signed with Endiama and introduced new legislation
governing the prospecting and marketing of diamonds.
Following this, De Beers has attempted to re-negotiate its contracts with
the Ministry of Geology and Mines, in accordance with the spirit of this new
legislation.
Since August 2000, De Beers has presented several broad proposals to the
Government that include the freezing of the loan and interest to Endiama
upon the constitution of an Endiama-De Beers mining company with the full
contractual rights and guarantees to mine and market the diamonds from the
economically feasible kimberlites discovered by De Beers. Subsequently, and
as part of this offer, De Beers has proposed the full cancellation of the
debt, now standing at over US$85 million, upon the opening of the first
kimberlite diamond mine in Angola in partnership with Endiama.
Unfortunately, 14 months after the decreed suspension of the contracts, no
agreement has been reached and, therefore, there are no legal guarantees
that underwrite the continued operations and future investment of De Beers
in Angola. Under these circumstances, the Board of De Beers is unable to
justify continued investment in its projects in Angola.
24 May 2001
Enquiries
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