De Beers, Luanda in new dispute over diamond marketing

The South African diamond giant De Beers, and the Angolan government were reported to be engaged in a fresh dispute this
week over marketing rights for Angolan diamonds, sources told IRIN on Tuesday.

The issue was highlighted by the seizure in Antwerp in recent days of two consignments of rough gems from Ascorp, a rival to De Beers. De Beers successfully applied for a court order for their seizure by Belgian authorities.

De Beers spokeswoman Tracey Peterson told IRIN the legal action had been taken because the company has a valid contract with the government to market Angolan diamonds.

"Our contract is still valid and we are arguing in the courts that we have the right to buy those diamonds. Ascorp have also signed an agreement with the Angolan government, and we have sought legal advice and put this process in place because we want to protect our contract," she said.

The diamonds in question come from the Cuango River valley in northern Angola, where the gems are mined under a joint venture, the Sociedade de Desenvolvimento Mineiro (SDM)involving the Angolan state diamond company, Endiama, Odebrecht of Brazil and Ashton mining of Canada. De Beers said it had loaned the government US $50 million to develop the mine under a
contract signed with Endiama in 1991. The mine was seized the next year by UNITA rebels, and only reverted to government control in 1998 when UNITA ceded the territory. De Beers said the contract was now back in effect and still had at least two years to run.

De Beers said Ascorp, a company in which an Israeli businessman, Lev Leviev has a stake, therefore had no legal right to market diamonds from the mine, even if it had signed its own contract with the authorities Luanda. Industry sources told IRIN Leviev is believed to have offered Luanda a larger share of diamond revenues at a time when De Beers is under scrutiny for allegedly
marketing diamonds from the mine during UNITA's tenure. The government has said it would not deal with De Beers if it had had been buying rough diamonds from UNITA.

The issue is further complicated by the fact that Endiama no longer has sole rights to legally mined diamonds in Angola, and that Ascorp too is a state-owned venture.

Industry sources said that at a meeting in Belgium last week, De Beers and the Angolan government failed to resolve the issue, and that the Angolan government was "less concerned" about the De Beers position.