A battle continues to brew between South African-based De Beers and a joint venture partner over a delayed diamond mining project in Botswana.
Development of the AK6 mine near Orapa stalled late last month when African Diamonds declared a dispute over the shareholder agreement relating to the site’s development. It charges De Beers was needlessly delaying the project due to unfounded concerns over power supply shortages to the area and points to an independent study showing “strong economic viability.”
The mining giant quickly fired back, saying southern Africa is facing an ongoing energy crisis that is expected to reduce power supply by 30 per cent over the next three to four years, causing major disruptions when the project enters critical development phases.
De Beers owns 71 per cent of the joint venture company called Boteti, while African Diamonds and Wati own 28 per cent and one per cent, respectively.
The dispute has also raised questions over the marketing and selling of AK6 diamonds. African Diamonds says revenue from an auction process may be up to 40 per cent greater than that estimated by De Beers.
In late July, De Beers said this figure was based on third-party analysis of 398 carats out of 1174 carats. While the company says the analysis was misleading and not representative of the full production profile of AK6, it conceded De Beers’ Diamond Trading Company would have placed a similar valuation on the selection.
The David and Goliath showdown has seen both sides make offers for the other’s shares, with neither side accepting.
De Beers owns the Snap Lake mine in the Northwest Territories and Victor Mine in northern Ontario.
