BHP commits to diamond market, Angolan exploration

LONDON – BHP Billiton said on Wednesday it would remain a major player in the diamond market and the world’s largest miner added that it was aggressively exploring Angola in search of the world’s next big gem deposit.

Diamond industry insiders have speculated for several years that BHP Billiton was looking to sell its only diamond-producing asset, the Ekati mine in Canada, possibly to world No.1 producer De Beers. But the head of BHP’s diamond division said Ekati was its route into a booming industry which it had no plans to quit.”If we weren’t in the diamond business we would be trying to figure out how to get into it …We like this business probably more than most of the minerals we are involved in,” Marcus Randolph told Reuters.”(Ekati) is a ticket for us to stay an active player.”Randolph also said BHP Billiton was deepening its involvement in Angola, despite concerns expressed by many Western firms over insecurity and corruption in the country which only recently emerged from 27 years of war.World No.1 De Beers, 45-per cent owned by mining conglomerate Anglo American, said last week it was to re-enter Angola after leaving in 2001 but BHP rival Rio Tinto has been more cautious.The head of its diamond division, Keith Johnson, told Reuters last week that Angola was unsafe, unstable and somewhere difficult to mine diamonds as state-owned company Endiama controlled the rights to market all diamonds produced there.Johnson said: “For (Angola) to be a big new diamond producer there’s going to have to been a further significant change in stability, sensible government and sovereign risk …We have no immediate plans to do anything big in Angola”.BHP Billiton has formed a joint venture with London-listed junior miner Petra Diamonds to gain access to the Alto Cuilo concession, tipped by some analysts to be the next major diamond discovery, situated in the north east of the country.Randolph said the firm had set up a full office in Angola following its partnership with Petra.Though BHP has increased its stake in the venture, he said it had not yet reached the point where an interest would be transferred to BHP.BHP Billiton’s diamond division posted earnings before interest and tax of US$410 million in the year to end-June 2004 from turnover of US$1,7 billion – 6,8 per cent of the group total.The division produced 5,5 million carats at Ekati in the last financial year but production has fallen 38 per cent in the first nine months of the current period, year on year, as the mine exhausts high-grade deposits.-Nampa-ReutersBut the head of BHP’s diamond division said Ekati was its route into a booming industry which it had no plans to quit.”If we weren’t in the diamond business we would be trying to figure out how to get into it …We like this business probably more than most of the minerals we are involved in,” Marcus Randolph told Reuters.”(Ekati) is a ticket for us to stay an active player.”Randolph also said BHP Billiton was deepening its involvement in Angola, despite concerns expressed by many Western firms over insecurity and corruption in the country which only recently emerged from 27 years of war.World No.1 De Beers, 45-per cent owned by mining conglomerate Anglo American, said last week it was to re-enter Angola after leaving in 2001 but BHP rival Rio Tinto has been more cautious.The head of its diamond division, Keith Johnson, told Reuters last week that Angola was unsafe, unstable and somewhere difficult to mine diamonds as state-owned company Endiama controlled the rights to market all diamonds produced there.Johnson said: “For (Angola) to be a big new diamond producer there’s going to have to been a further significant change in stability, sensible government and sovereign risk …We have no immediate plans to do anything big in Angola”.BHP Billiton has formed a joint venture with London-listed junior miner Petra Diamonds to gain access to the Alto Cuilo concession, tipped by some analysts to be the next major diamond discovery, situated in the north east of the country.Randolph said the firm had set up a full office in Angola following its partnership with Petra.Though BHP has increased its stake in the venture, he said it had not yet reached the point where an interest would be transferred to BHP.BHP Billiton’s diamond division posted earnings before interest and tax of US$410 million in the year to end-June 2004 from turnover of US$1,7 billion – 6,8 per cent of the group total.The division produced 5,5 million carats at Ekati in the last financial year but production has fallen 38 per cent in the first nine months of the current period, year on year, as the mine exhausts high-grade deposits.-Nampa-Reuters