Inco to invest in African diamonds

Nickel producer Inco (TSE) will try its luck in the diamond business after signing an agreement with the government of Ghana.

In a joint announcement with Lazare Kaplan International, a New York-based diamond polishing and trading company, Inco says it will form a joint venture to mine, recover and market diamonds from a government-owned concession 70 miles northwest of Accra, the capital of Ghana.

Inco will be the project operator, responsible for mining and processing, while Lazare will take care of marketing and sales.

Under the terms of the agreement, operations controlled by Ghana Consolidated Diamonds in West Africa will be privatized. In preparation for final negotiations with the government later this year, the two companies are proceeding with a technical and financial feasibility study. “(Chairman and Chief Executive Officer) Don Phillips has made the point that we are always looking for new ventures outside our core business,” said Inco spokesman Bob Purcell. “But we’re not trying to take a dominant position in the diamond business.”

South African mining giant Debeers Consolidated controls about 80% of the world’s rough diamond market. In 1990, sales by its Central Selling Organization totalled US$4.17 billion.

Current output at Ghana’s Akwatia-Birim River alluvial mining concession, which peaked at 2.5 million carats per year in the 1960s, varies from 100,000 to 200,000 carats annually. By comparison, Consolidated Diamond Mines’ alluvial operations in Namibia, among the largest in the world, produced 748,000 carats in 1990.

But, as a result of exploration sponsored by the United Nations, more than 11 million carats have been outlined in proven and possible reserves around the Akwatia-Birim River deposits. These reserves could support production of up to one million carats per year.

Inco expects to invest about $3-4 million in the first two years of the venture.