De Beers gains access to Russian resources

The diamond giant De Beers has obtained direct access to Russian diamond resources for the first time.

This follows reports by the Russian media on Monday that the Russian government has given De Beers permission to acquire a 49.99% stake in Arkhangelskoe Geologodobychnoe Predpriyatie (AGP), a subsidiary of Russian oil and gas giant Lukoil. AGP holds the licence to explore and mine the Verkhotinskaya diamond field, which contains reserves estimated at US$5 billion.De Beers and Lukoil, which have been in dispute for several years over the ownership of and right to develop the project, agreed in April this year to the acquisition that would see Lukoil hold on to the remaining 50.01% in AGP.In terms of the deal, De Beers through Archangel Diamond, a Canadian junior majority held by the diamond giant, would acquire the stake in AGP.But Archangel Diamond Corporation on Friday said it was waiting for confirmation of the reports that the newly appointed Russian Government Commission had given its consent to the transaction pursuant to the Russian law concerning foreign investment in strategic assets.”Archangel is seeking to obtain official confirmation of these reports from the Russian Federal Anti-Monopoly Service as well as full details of the decision of the Commission (including what conditions are attached to such consent),” the company said.Approval of the transaction under the Russian law on protection of competition is the final condition precedent to the transaction.De Beers has never had direct ownership in Russian diamond mines before.For 50 years De Beers purchased diamonds from Russia’s largest diamond producer Alrosa, but the companies are compelled to cease co-operation in 2009.This is by order of the European Commission, which feels the scrapping of the agreement is necessary to promote healthy competition on the European market.De Beers and Alrosa jointly account for 65 per cent of the world diamond market.- Business ReportAGP holds the licence to explore and mine the Verkhotinskaya diamond field, which contains reserves estimated at US$5 billion.De Beers and Lukoil, which have been in dispute for several years over the ownership of and right to develop the project, agreed in April this year to the acquisition that would see Lukoil hold on to the remaining 50.01% in AGP.In terms of the deal, De Beers through Archangel Diamond, a Canadian junior majority held by the diamond giant, would acquire the stake in AGP.But Archangel Diamond Corporation on Friday said it was waiting for confirmation of the reports that the newly appointed Russian Government Commission had given its consent to the transaction pursuant to the Russian law concerning foreign investment in strategic assets.”Archangel is seeking to obtain official confirmation of these reports from the Russian Federal Anti-Monopoly Service as well as full details of the decision of the Commission (including what conditions are attached to such consent),” the company said.Approval of the transaction under the Russian law on protection of competition is the final condition precedent to the transaction.De Beers has never had direct ownership in Russian diamond mines before.For 50 years De Beers purchased diamonds from Russia’s largest diamond producer Alrosa, but the companies are compelled to cease co-operation in 2009.This is by order of the European Commission, which feels the scrapping of the agreement is necessary to promote healthy competition on the European market.De Beers and Alrosa jointly account for 65 per cent of the world diamond market.- Business Report