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Gold/Mining/Energy : REX DIAMOND MINING TSE:RXD -- Ignore unavailable to you. Want to Upgrade?

To: PHILLIP FLOTOW who wrote (2462)	8/2/2000 5:36:17 PM
From: George J. Tromp	Read Replies (1) \| Respond to of 2522

London, Aug. 2 (Bloomberg) -- De Beers said it may offer new loans to Russia's diamond producer, RAO Alrosa, as it pushes to extend a sales pact with the producer of one-quarter of the world's diamonds beyond the agreement's expiration next year. De Beers, which controls two-thirds of all diamond trade, hopes to sign a loan agreement with Alrosa along with a new sales accord, said De Beers Managing Director Gary Ralfe. Alrosa said last month it should review conditions of cooperation with De Beers and said the two may eventually have to compete. ``We've lent money to Alrosa in the past and will consider further lending,'' Ralfe said in comments to reporters. ``That's a demonstration of our close cooperation,'' he said when asked whether the loan would be an inducement for the Russian producer to negotiate a new pact. He declined to specify the amount of any new loan. De Beers lent the Soviet government $1 billion in the early 1990s and then gave state-controlled Alrosa several loans of ``tens of millions of dollars,'' Ralfe said. Both companies have repeatedly declined to specify the amount. All the loans have been fully repaid in rough diamonds, the companies said. Under the current agreement, Alrosa sells De Beers at least $550 million worth of rough diamonds a year. After De Beers last year abandoned its practice of buying and stockpiling diamonds from the open market to prop up demand, Alrosa asked for new ways of cooperating with the South African company. Alrosa suggested taking a stake in De Beers's marketing arm or creating a group of diamond producers, resembling the Organization of Petroleum Exporting Countries, that would set production quotas. Alrosa also proposed reviewing the way the two companies set up prices under the present agreement. Ralfe declined to comment on the proposals. Open Competition Alrosa said open competition between the two diamond producers, though possible, would damage both companies. ``We're either together as equal partners or we separate and everyone in the industry loses,'' Alrosa Deputy Chief Executive Sergei Ulin said in an interview with Bloomberg News. The company plans to sell De Beers about $900 million of diamonds this year, little changed from 1999, of its annual production of $1.6 billion of stones, he said. Ulin said Alrosa, whose net profit surged 17-fold last year to 10.5 billion rubles ($374 million) on rising diamond prices and a drop in the ruble, plans to borrow abroad to finance its $2.5 billion, seven-year investment program to upgrade its mines and infrastructure. ``De Beers's new strategy is a strategy of opportunities,'' Ulin said at a press conference. ``And Alrosa will make the most of these opportunities.'' Aug/02/2000 13:22 ET