De Beers polishes its approach to junior partners in Canada
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Diamond giant acts on criticism that it is slow and arrogant'
Antwerp Correspondent
RECENT comments made by junior mining companies in Canada suggest a different approach by De Beers as it grapples for market share.
Early last year a survey commissioned by De Beers' Canadian subsidiary was the talk of the town at the PDAC, the leading annual mining conference in Toronto.
Several participants said that the survey of junior mining companies' opinions on De Beers' approach to joint ventures and potential partners had concluded that the South African company was "slow, arrogant and inconsistent".
Other points of criticism included the slowness of De Beers' results and reports, that it did not always keep junior partners fully informed and that it sometimes deviated from the agreed action plan.
Several junior mining companies have now been promised an improvement in timely reporting, full transparency and a commitment that they will be full partners in the planning and decision making process. De Beers' market share has fallen below 50%.
"There is tremendous competition, it's a stock market-driven business, and you have to produce results to raise money," said the CEO of a prominent junior mining company in Vancouver.
"De Beers has already been looking for diamonds in Forte a la Corne (Canada) for more than 10 years."
Over the past nine months, De Beers Canada has been given the mandate from the De Beers Group to work freely with local partners to seal deals that fit the local market.
It has signed nine agreements with Canadian-listed exploration companies. To hasten p ossible production, De Beers has also doubled the capacity of its indicator mineral sorting laboratory in Toronto and upgraded some laboratories to cut turnaround times and improve the quality of sample reporting.
"De Beers Canada's new approach to joint ventures has been to encourage variety and originality in the deals transactions that can be negotiated quickly and simply," said spokeswoman Linda Dorrington.
"So far this is working fairly well, but the jury is still out on some issues," said one junior miner.
A key point with previous partnerships centred on the fact that De Beers would have the right to market all diamonds produced from a potential mine under what De Beers called a standard sales contract.
In all recent agreements, the partner becomes the operator and has the marketing rights, albeit up to a certain threshold.
For example, in a recent agreement with Tahera, involving projects of a defined value of 615m, Tahera will be the operator and have the marketing rights.
But for larger scale projects that prove economic, De Beers will be the operator and market the diamonds. While De Beers has been unable to bring a mine into production in Canada so far, it remains a powerful player with expertise.
"As a Canadian junior we really do see De Beers Canada as the partner of choice," said Robert Mc Callum at Kensington Resources.
"With their more than 100 years in the diamond business, state-ofthe-art technical facilities and experienced and competent people, they bring a world of reputation and credibility to any project."
De Beers currently has two mining projects in Canada.
Snap Lake, in the Northwest Territories, is set to go into full production in 2007 and is expected to produce between 150m and 200m annually.
De Beers is expected to make a decision on the development of the Victor project in northern Ontario by the middle of the year.
AI
