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Gold/Mining/Energy : SOUTHERNERA (t.SUF) -- Ignore unavailable to you. Want to Upgrade?

To: PHILLIP FLOTOW who wrote (5010)	11/16/1999 12:38:00 PM
From: PHILLIP FLOTOW	Read Replies (1) \| Respond to of 7235

This is an portion of an article on DeBeer's, the full article is at: scmp.com Mining analysts believe CSO sales of uncut stones will top $5 billion for the first time this year, up from $3.3 billion last year. They attribute the increase to the booming US economy and one-off demand for millennium gifts. But one good year cannot hide the disappointing long-term financial performance of the company. After a decade of relentlessly rising stockpiles - which produce no income - De Beers shareholders would have been better off investing in government bonds through the 1990s. The bottom-line is that efficiency must improve across the group, costs must be cut, margins improved and the stockpile reduced. De Beers can no longer afford to carry the rest of the industry, Mr Penny argues. "De Beers now controls between 60 and 70 per cent of world supply through the CSO," he said. "This is not enough to justify the role it has traditionally played in holding costly buffer stocks and of advertising very expensively on behalf of the industry as a whole." PHIL

To: PHILLIP FLOTOW who wrote (5010)	12/12/1999 5:03:00 PM
From: crudestope	Respond to of 7235

S A Diamond Board and De Beers. The following is from Charles Wyatt's Minesite minesite.com Regards, Crudestope. DE BEERS UPS THE ANTE IN BATTLE WITH GOVERNMENT DIAMOND VALUATOR As the war between the South African Government's diamond valuator and De Beers drags on it gets more and more murky. The latest bit of mud slinging was initiated by a public letter from Claude Nobels explaining his role. "The Government Diamond Valuator", he explained, "is responsible primarily for the verification and valuation of all rough diamonds produced in SA, for the purposes of applying a State levy and export taxes. The GDV's independence is crucial as about 10M carats of diamonds are exported annually from South Africa, with a total value of about US$882m (1998). Understating the valuation by even a small percentage would result in a huge difference in actual market value of the diamonds. It is not surprising, therefore, that my appointment and dedication to duty should encounter some resistance from certain players in the industry. It is even less surprising, given the fact that the previous GDV was widely acknowledged to be less than effective in performing its mandate. In contrast, the current GDV's scope of work is much wider than before and it is to be expected that its remuneration would be higher. A team of 30 people now performs a mandate that overshadows the rubber-stamping antics of the past." The full text of the letter is very long and seeks to justify every action taken by Mr Nobels and his team, but this extract gives a fascinating insight into the enmity between the GDV and De Beers, no sorry, certain players in the industry. For a start there were many in the diamond industry which thought that Nobels was just another poodle of De Beers when his firm DVIC was appointed. He clearly appreciates this and is determined to distance himself from his predecessor. De Beers is bound to dispute this point as vehemently as it disputes the possible conflict of interest resulting from the diamonds being valued on the De Beers Standard Selling Value (SSV) system, which is an internal De Beers pricing system. " The Diamonds Act," claims Nobels " requires us to assess the market value of the diamonds produced. Market value is the price a willing buyer is prepared to pay a willing seller in an arm's-length transaction. Most often and not surprisingly, market valuations have proven higher than those of De Beers' SSV, thus yielding a higher levy or export duty to be paid." This clearly got right up the nose of De Beers, but the diamond giant is much too cunning a campaigner to show its hand to overtly. Into the lists, therefore trotted Ashley Hilton, a diamond analyst with stockbrokers BOE Securities with a public response, but in a "personal" capacity. Starting off with some good old party-line arguments, he then went on to patronise Mr Nobels as a Belgian who would not understand the history of the South African diamond industry, not the leading role De Beers played in it. This was hardly the way to make friends and influence people, but it got worse. " I have a few questions of my own, Mr Nobels" he continued. " Is it true that you were fired from a company closely associated with De Beers in the 1980s? How did you meet the chairperson, Ms Hlengiwe Mkhize, of your company, DVIC? What value does she add to the operation of the GDV? Ms Mkhise is also chairperson of the reparations committee of the Truth and Reconciliation Committee. When was the contract appointing your company as the GDV signed? Was your appointment approved by the SA Diamond Board (as required by law) and does this appear in the minutes of the Board meetings?" Somehow these questions do not quite fit with the usual profile of an investment analyst - a person who delves into company accounts and industry statistics to produce investment recommendations for clients. This is the sort of garbage beloved by dirty tricks departments. It is not for us to suggest that De Beers has such a department, but it would be interesting to find where Mr. Hilton obtained his ammunition. Doubtless he would prefer not to tell us. 13 Dec. 1999