Aim-listed African Diamonds (AFD) on Wednesday said that it has started legal proceedings against diamond mining giant De Beers, with regard to the proposed AK6 mine, in Botswana.

The first legal step was an application for an interdict to prevent De Beers for applying for a retention licence over AK6. The matter would be heard in the Botswana High Court in September.

The legal proceedings were in conjunction with arbitration proceedings and other activities that AFD said were designed to protect the interests of its shareholders.

De Beers and AFD own the AK6 prospect in a joint-venture company called Boteti (De Beers 71%, AFD 28% and Wati 1%).

De Beers has used its majority stake in Boteti to pass a resolution to apply for a retention licence and today Boteti has applied for a retention licence. The board believes this to be totally unnecessary, costly and time wasting,” AFD said.

“We are seeking, inter alia, the removal of De Beers as operator and the sale of De Beers’ shares in the Boteti joint venture to African Diamonds,” said AFD chairperson John Teeling.

The proceedings followed a dispute regarding the start-up of the AK6 diamond mine near Orapa, which De Beers wanted to delay, largely owing to power constraints, but AFD believed there was “no valid reason why the AK6 mine cannot be developed immediately”.

“We believe that we can build the mine more cheaply than our majority partner, De Beers, can operate the mine more efficiently and will obtain significantly higher diamond prices than those estimated by De Beers," the company said.

In a separate statement, De Beers said that it was “pleased with the High Court ruling,” and noted that the judge had found that Boteti was bound by the terms of its Diamond Marketing Agreement and that these could not be changed without De Beers’ consent; that Clause 11.2 of a Memorandum of Understanding between the shareholders of Boteti specifically contemplated a situation under which a retention licence could be applied for; and that De Beers arguments in the matter were “convincing”.

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