Kabila asks Alrosa to Keep Diamond Deal Secret

16.09.08, 10:36 / Mining

Alrosa has agreed to start diamond prospecting in the Democratic Republic of Congo (DRC), at the request of President Joseph Kabila.

But Alrosa sources say that details of the undertaking and of a meeting Alrosa chief executive Sergei Vybornov had last week with Kabila, should be kept secret.
It is Vybornov's second meeting with Kabila this year; the first occurred, with comparably little disclosure, in March. 
According to a new release, Vybornov met with Kabila on September 12 in Kinshasa. The official statement reports: "The discussion resulted in the decision that, in the framework of its cooperation with the DRC, ALROSA will carry out detailed exploration of a diamond deposit in the south of that African country."

A source close to Vybornov refused to identify the deposit. "In agreement with the Congo side," he said, "we do not say more than is disclosed in press-release we've published. We will be back to this question, but later."
Alrosa first opened talks with Kabila and the Congolese when Vybornov's predecessor, Alexander Nichiporuk, visited Kinshasa in April 2005. Alrosa's involvement in the DRC at the time also involved links to two Israelis, Arkady Gaydamak and Dan Gertler.

Gaydamak was active in introducing Nichiporuk in neighboring Angola; Gertler in DRC. Gertler was then personally close to Kabila, and through a company he and others ran called Emaxon Finance Corporation held the marketing concession for most of the DRC's diamond exports.

Alrosa's interest in Gertler is said to have been intended to buttress the break the Russian company had made with Lev Leviev, the biggest of the Israeli diamantaires, with whom, until then, Alrosa had been partnering for the sale of diamonds from the Catoca mine in Angola.

According to a letter on Alrosa letterhead, dated June 22, 2005, Nichiporuk purportedly made an offer to buy a 54% shareholding in the DRC's Sengamines mine and licenses for $60 million. The letter was later judged to be a forgery. However, Alrosa had already been studying a number of diamond assets in the DRC, including Sengamines.

In 2006, Nichiporuk's initiative in the DRC, as well as Angola, came under attack from his rival, Sakha region president, Vyacheslav Shtirov, who accused him of shorting investment in Sakha, and favoring Africa instead. Shtirov's campaign to oust Nichiporuk intensified through the year, and led, in February 2007, to his replacement by Vybornov. 

A year elapsed before Vybornov ventured in Nichiporuk's footsteps in central Africa. He first met Kabila at an undisclosed location in the DRC on March 18, this year, following stops in Namibia, where he met President Hifikepunye Pohamba, and also Angola, where he met President Jose Eduardo dos Santos.

The communique issued after the Kabila meeting said Vybornov's talks focused on "issues related to cooperation between ALROSA and the DRC in diamond exploration and energy sector".

The ownership of Sengamines has been contested for several years.

In 2006, Mike Nunn, the South African chief executive of First African Diamonds, signed a purchase agreement for an 80% stake in Sengamines, while Societe Miniere de Bakwanga (MIBA), the DRC state diamond producer, held 20%.

The deal required returning Sengamines to exploration status, in order to assess the potential of the concession. The two partners agreed to change the name of the operating company to Entreprise Mini?re de Kasa' Oriental SARL (EMIKOR).

On March 29, at the traditional overview for shareholders which Alrosa leaders give each year at Mirny, both Vybornov and Alrosa board chairman, Deputy Prime Minister Alexei Kudrin, explained what they are doing in Angola and DRC as a hedge against the rising costs and technical risks of underground diamond mine production in Russia.

In the DRC there have been active measures to annul Nunn's First African Diamonds deal, and find a new source of finance and mining expertise for Sengamines.

There has also been a fierce challenge to the five-year old Emaxon marketing deal. In April of this year, MIBA officials announced that they had terminated the Emaxon deal, and would conduct open auctions of rough instead.

Jean-Louis Kayitenkore
Procurement Consultant
Gsm: +250-08470205
Home: +250-55104140
P.O. Box 3867
East Africa
Blog: http://www.cepgl.blogspot.com
Skype ID : Kayisa66

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