Diamond giant De Beers has announced plans to create a new diamond mining company to meet new South African government rules on increasing black economic empowerment (BEE).
The deal will be a collaboration between the state-run, black-controlled firm Alexkor and De Beers' Namaqual mining operations.
De Beers' Namaqual was established in 1928 and produces 7% of De Beers Consolidated Mines South African operations total rough diamond output.
De Beers reported a 6% drop in diamond sales at the end of 2006 but predicts demand for rough diamonds to increase driven mostly by the economies of China and India.
The company attributed the fallen sales to reduced wholesale supplies from Russia. The year end tallies showed a drop from $6.54 billion to $6.15 billion.
It is expected that the formation of the new firm will be completed sometime in 2008. The mining company will operate along South Africa's northwest coast, an area that both De Beers and the South African government have mined for decades.
In a previous compliance with BEE, De Beers sold 26% of its South African division to a black-owned company in 2006. The stake was purchased for $611 million by Ponahalo Holdings whose ownership is split 50/50 between De Beers staff and pensioners and a black investment firm called Ponahalo Capital.
Manne Dipico, a senior member of the ruling African National Congress (ANC) serves as chairman of Ponahalo Capital and owns an 18% stake in the firm.
South Africa's BEE strategy is meant to disperse economic and political power among the country's black majority. It is aimed at increasing share of banks, insurers and investment groups. The agreements are intended to create changes that better the majority of South Africans, not just an elite minority.
The policies have been scrutinized for transferring wealth only to the nation's elite black business community which does not represent a broad population base. Most black South Africans have not benefited from the BEE agenda and remain poor.
The deal will be a collaboration between the state-run, black-controlled firm Alexkor and De Beers' Namaqual mining operations.
De Beers' Namaqual was established in 1928 and produces 7% of De Beers Consolidated Mines South African operations total rough diamond output.
De Beers reported a 6% drop in diamond sales at the end of 2006 but predicts demand for rough diamonds to increase driven mostly by the economies of China and India.
The company attributed the fallen sales to reduced wholesale supplies from Russia. The year end tallies showed a drop from $6.54 billion to $6.15 billion.
It is expected that the formation of the new firm will be completed sometime in 2008. The mining company will operate along South Africa's northwest coast, an area that both De Beers and the South African government have mined for decades.
In a previous compliance with BEE, De Beers sold 26% of its South African division to a black-owned company in 2006. The stake was purchased for $611 million by Ponahalo Holdings whose ownership is split 50/50 between De Beers staff and pensioners and a black investment firm called Ponahalo Capital.
Manne Dipico, a senior member of the ruling African National Congress (ANC) serves as chairman of Ponahalo Capital and owns an 18% stake in the firm.
South Africa's BEE strategy is meant to disperse economic and political power among the country's black majority. It is aimed at increasing share of banks, insurers and investment groups. The agreements are intended to create changes that better the majority of South Africans, not just an elite minority.
The policies have been scrutinized for transferring wealth only to the nation's elite black business community which does not represent a broad population base. Most black South Africans have not benefited from the BEE agenda and remain poor.
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- Diamond giant De Beers has announced plans to create a new, black-owned diamond mining company.
- The move is in compliance with new S.A. government rules on increasing black economic empowerment.