De Beers sells 26% stake in subsidiary

Hindustan Diamond Company (HDC), the Mumbai-based equal stakes joint venture between the government and De Beers, has picked up a 26 per cent stake in De Beers India for $3.75 million (Rs 16.39 crore approximately). Post stake sale, De Beers' holding will get reduced to 74 per cent.

"The strategy behind the stake sale is to roll the diamond trading and exploration businesses of De Beers into one entity, while retaining the significant stake held by the government in the expanded business interest of De Beers," the spokesperson of De Beers, UK told Business Standard.

The two companies have signed a memorandum of understanding for the stake sale at the De Beers' corporate headquarter in Johannesburg. The Indian delegation to Johannesburg included V Madhavan Nair (IAS), chairman and managing director of HDC and Rajiv Bhandari, chairman and managing director of De Beers India.

"The pact is a further strengthening of the relationship between De Beers and the government that has already existed for the past two decades, into a partnership in diamond mining in India. The agreement also illustrates the interest shown by the government in diamond exploration and mining," Nair said during the signing ceremony.

The diamond major's exploration investment in India has been approximately Rs 45 crore ($10 million) with planned expenditure in 2005 budgeted at Rs 35 crore ($7.7 million).

De Beers was first granted reconnaissance permits in India at the end of 2000 and it had commenced active exploration in early 2001.

Nicky Oppenheimer, chairman of the De Beers Group, said: "The agreement cements De Beers' commitment to the Indian diamond industry." HDC is involved in the buying and selling of rough diamonds to small and medium sized firms in the Indian diamond market.

The group exploration director, Bill McKechnie reiterated De Beers commitment to the discovery of new world class diamond mines in India.

De Beers India has till date discovered over 20 new kimberlite deposits in four states. The discoveries are currently undergoing appraisal for diamond content.