Rapaport Magazine

Penny Joins Investment Firm

Penny Joins Investment Firm, IGE’s Sales Hit $3 Million, WFDB Issues Warning on Ivory Coast, India Targets Offshore Accounts

By Rapaport
RAPAPORT... Gareth Penny, De Beers former chief executive officer (CEO), joined private equity firm TowerBrook Capital Partners as a senior adviser. Penny will be responsible for helping the company explore and develop investment opportunities across the global mining and minerals industry, according to the firm, with an emphasis on identifying opportunities where insight can transform the value of the acquired businesses.

Penny left De Beers in July. His replacement has not yet been named.

IGE’s Sales Hit $3 Million

IGE Resources sold $3.4 million (SEK 20.9 million) in rough diamonds during its fiscal 2010. The junior diamond miner recorded impairment and depreciation charges of $58 million (SEK 374.7 million), resulting in a net loss of $69 million (SEK 443.9 million). All sales were attributed to the diamonds mined at the Cassanguidi and Luxinge mines in Angola.

The Cassanguidi diamond project is moving toward full commercial operations. A total of 4,570 carats of rough diamonds were recovered from the Cassanguidi mine in the fourth quarter and 3,896 carats were sold at an average price of $176 per carat. IGE is preparing for an additional investment of $1.5 million in order to ramp up production at Cassanguidi and reach the revised production target of 7,000 carats per month by the end of 2011.

The company’s mining and processing plans for the Bakerville project in South Africa are also moving forward. The Bakerville project was awarded mining rights in January 2011 and its start-up will be funded by an additional $9 million investment by IGE.

WFDB Issues Warning on Ivory Coast

The World Federation of Diamond Bourses (WFDB) asked affiliated bourses to advise their members on the renewed risks of “conflict diamonds” from the Ivory Coast. In a letter to its members, the Kimberley Process Certification Scheme’s (KPSC) chairman, Mathieu Yamba, stated that the country’s ongoing unrest is of great concern to the diamond industry due to the “risk of re-emergence of conflict diamonds and an increase in rough diamond smuggling throughout West Africa.”

Since early December, the Ivory Coast has experienced renewed political and civil unrest following the runoff election between its former President Laurent Gbagbo and President-elect Alassane Ouattara, which Gbagbo refuses to concede. The UN’s operation in the country, UNOCI, has been protecting civilians as well as guarding the Golf Hotel, where President-elect Ouattara and his government are based.

In his letter, Yamba stated that KP and UN reports indicate that “diamond mining continues unabated” and that rough diamonds may be leaving the country through its neighbors. Yamba called on KPCS participants to exercise “strong vigilance and ensure all the necessary KPCS decisions are upheld in support of the UN-imposed sanctions.”

India Targets Offshore Accounts

The Indian government served notices to 17 people alleged to have untaxed money in foreign banks and initiated prosecution against them, but refused to reveal their names, according to the Press Trust of India news agency. The comments, made by Union Finance Minister Pranab Mukherjee, came a day after media reports revealed the names of 15 entities, including individuals and trusts, said to have kept illicit money in LGT Bank of Liechtenstein in Switzerland.

“The government, suo motu, cannot reveal the names because according to treaty, we can only use the information for taxation purposes,” Mukherjee told reporters. “We can only reveal the details in the open court when the matter comes up for hearing.”

The names were given to India by Germany, which had purchased the stolen data of 1,400 people with secret accounts in LGT Bank. India has refused to make these names public, citing a secrecy clause in the deal with Germany, and has shared the details with the Supreme Court only.

The “black money” issue, as the practice of keeping offshore accounts is referred to, has become a big political controversy, with opposition parties asking the government to reveal these names and even the courts escalating the pressure to take action to return the money stashed by Indians abroad.

In a recent press conference, Mukherjee said the government has initiated a multipronged strategy to tackle the issue, including negotiating with 65 countries for the purpose of obtaining information about tax evaders.

Mukherjee maintained that there were no clear estimates about the amount of black money. “The government has nothing to hide,” he added.

— Additional reporting provided by Acquire Media.

Article from the Rapaport Magazine - March 2011. To subscribe click here.

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