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To: David Lawrence who wrote (13381)	1/19/1998 8:32:00 PM
From: Glenn D. Rudolph	Respond to of 45548

De Beers starts wooing Canadian firms Reuters Story - January 19, 1998 17:56 %GDM %MET %AU %GB %MIS %CA %ZA %US %GOL %RESF %FCAST %TH %KR %PH DBRS.J BHPX DMMb.TO ABZ.TO RIO.L V%REUTER P%RTR By Paul Simao TORONTO, Jan 19 (Reuters) - De Beers Consolidated Mines Ltd. , has launched a bid to woo small Canadian mining companies and solidify its dominance of the world diamond market, De Beers Chairman Nicholas Oppenheimer said on Monday. Shortly after opening a company office in Vancouver, British Columbia, Oppenheimer told Reuters in an interview that the diamond group's enhanced presence in Canada would help it forge a new empire in the far reaches of the Canadian north. "The number of small companies prospecting for diamonds has multiplied here in Canada...and diamond mining has become the in-thing around the world," said Oppenheimer. "It's important that De Beers gets to know them and see whether there are opportunities down the road to do joint ventures, partnerships, you name it." Oppenheimer is the grandson of Sir Ernest Oppenheimer, the legendary entrepreneur who took control of the South African company in 1927 and laid the groundwork for what has become a $4 billion annual business. In recent years, De Beers, which controls 70 percent of the world's diamond market through the London-based Central Selling Organization (CSO), has seen its once-undisputed grip on the world supply of diamonds begin to loosen. Soft demand, particularly in financially beleaguered Southeast Asia, cut into the company's bottom line in the second half of last year and led to lower sales than in 1996. Oppenheimer said that continued weakness in De Beers's traditionally strong Asian markets -- Thailand, South Korea and the Philippines -- could spell trouble for the company in the early part of 1998. "That's obviously going to flow on into the beginning of this year and I think we're going to have a difficult beginning to 1998," he said. More worrying to De Beers is the growing trend in which diamond firms choose to bypass the De Beers cartel, in some instances forging their own direct marketing agreements. Large producers in Australia and Russia, including those operating the giant Argyle diamond mine in Australia, have begun marketing diamonds themselves or have signed agreements with independent marketers such as IDH Diamonds of Belgium. De Beers is keen to avoid a similar situation when Australia's Broken Hill Property Co. Ltd. and Vancouver-based Dia Met Minerals Ltd. begin operating a new diamond mine near remote Lac de Gras in Canada's icy Northwest Territories later this year. The Lac de Gras mine is expected to produce between C$500 and C$700 million ($350 million to $490 million) worth of diamonds a year. That, combined with a nearby joint venture between Aber Resources Ltd. and Rio Tinto Plc , will move Canada ahead of South Africa as a diamond producer, supplying about 10 percent of the world's diamond production by 2001. "They've made some noises about selling some of their diamonds to De Beers and selling some elsewhere. Nothing is final at the moment," Oppenheimer said. "We would certainly like to market their diamonds and we are talking to them and we believe that that is something that will evolve as it evolves," Oppenheimer added.