De Beers to Supply Canada Rough Directly to Local Manufacturers

De Beers Canada has affirmed that it will be marketing a portion of the company's Snap Lake mine production, in Canada's Northwest Territories, directly to local manufacturers.

"De Beers recognizes and respects the policies of the Government of the Northwest Territories (GNWT) on this issue. We see two possible avenues for the supply of Snap Lake rough diamonds to the NWT; one means is through the socio-economic agreement which is under negotiation with GNWT, and the other is through Aboriginal equity participation in the project which would be covered by the Impact Benefit Agreements (IBA's) currently being negotiated with the affected Aboriginal groups," stated Richard Molyneux, President and CEO of De Beers Canada.

The announcement was made during discussions and hearings, which were part of the   McKenzie Valley Environmental Impact Review Board (MVEIRB) review of the De Beers Snap Lake Diamond Project.

At present, all of the company's rough output is shipped from the country of extraction to London, where it is sorted and mixed. Clients then receive rough goods of mixed origin.

The company's clients in Canada will receive only Canada-produced rough. At the moment it is still unclear exactly what percentage of the Snap Lake production will be put aside for NWT manufacturers, but is expected to be somewhat restricted, in line with the needs and capabilities of the local manufacturing industry.

The project is slated to come on-stream in the fourth quarter of 2006, on condition that all necessary permits be issued by mid-2004.

The company also stated that at full production, the mine will employ approximately 500 people and is committed to hire as many local workers as the local labor market can provide. "We are committed to maximizing local employment and will make very significant investments both in terms of finance and other resources, to achieve that," said John McConnell, Vice President, NWT Projects for De Beers.

"It is De Beers' practice to maximize local Aboriginal employment wherever we operate, on the basis that this represents an ideal goal of 100 percent. The company has achieved in excess of 80 percent of this target on most of our mines in Southern Africa."

On the subject of the branding of Canadian diamonds, De Beers said that preliminary research indicates that the current Canadian brands are being well promoted and are able to meet market needs, and that under present market conditions an additional De Beers Canadian brand would only hurt current branding initiatives.

Molyneux said though that De Beers would keep a close watch on developments within the industry and would review this position as appropriate over time and as the Snap Lake project moves closer to production.