Diamonds ARE gems! De Beers goes to court over Jagersfontein tailings

DIAMONDS AND GEMS - COURT PUNCH UP
Diamonds ARE gems! De Beers goes to court over Jagersfontein tailings

De Beers confirms it is contesting the granting of prospecting rights to a BEE company over tailings dumps at its Jagersfontein property, Free State, South Africa.Author: Barry SergeantPosted: Thursday , 29 Nov 2007 JOHANNESBURG
De Beers, the world's leading diamond miner, has confirmed its involvement in high level litigation over a prospecting licence granted last year to a black economic empowerment (BEE) entity over tailings dumps at its old Jagersfontein property where mining was first recorded in 1870.

South Africa's department of minerals and energy (DME) last year issued a prospecting right to Ataqua Mining under the Mineral and Petroleum Resources Development Act (MPRDA).

Recycling of tailings dams and dumps at various mines is relatively common in South Africa, given the age of many mines, and improved processing and refining technologies.

De Beers was reacting to a report in a national daily newspaper in South Africa, a report based on various court papers, but excluding De Beers's court papers. De Beers in reaction has denied suggesting, as was reported, that diamonds are not gems, nor that De Beers does not need to comply with environmental regulations when processing the tailings dumps at Jagersfontein, nor that diamonds occur "artificially" in the tailings dumps.

The newspaper report stated that in its papers, government argues that the "unmined gems" contained in the tailings dumps fall under new legislation and are therefore open to prospecting. In reaction, De Beers states that the tailings and the diamonds contained in the tailings comprise material which has already been mined, and therefore no longer occurs naturally in, or on, the earth.

De Beers currently processes similar tailings elsewhere in South Africa; indeed, the Kimberley Mine operation produces well over one and a half million carats a year sourced entirely from company tailings going back over the past century to when mining began in the city in the 1870s.

Ataqua has reportedly complained that "for more than 30 years De Beers has chosen not to exploit the rich and valuable resources of the tailings dumps [at Jagersfontein], effectively sterilising the resources". The argument, whatever its merits, does not alter the fundamental ownership of the tailings dumps.

The litigation will be closely watched. A recently-published Chubb investment risk rating of resource-rich countries placed South Africa in a lowly 18th position. Sweden tops the list, but is immediately followed by Namibia; one of Namibia's neighbours, Angola, ranks 30 of 32 countries named.

Botswana ranks seventh after the USA, but ahead of Australia, one of the world's biggest beneficiaries of mining investment in the past few years. Ghana is ranked right after Australia; Zimbabwe is not mentioned in the list at all. The overall Chubb rating is based on weighted scores for sovereign risk, land access, green tape, land claims, red tape, social risk, infrastructure, civil unrest, natural disasters, and labour relations.