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Thursday, 31 May, 2001, 12:06 GMT 13:06 UK
Angola 'regrets' De Beers pullout
100 Carat Diamond
Angola and De Beers rely on each other for exploiting the country's diamond resources
By the BBC's Justin Pearce in Luanda.

The Angolan government has responded for the first time to the news that the international diamond mining giant De Beers is suspending its prospecting operations in the country.

The Angolan government says it regrets what it calls the unilateral decision by De Beers to suspend further investment in Angola.

The statement does not deny that the state-owned diamond company Endiama failed to repay a $50m loan to De Beers.

That debt was one of the main points cited by the international diamond company when it announced last week that it was suspending its operations in Angola.

The government argues that Endiama's operations had been hampered by the continuing civil war in diamond-producing areas, and it was for this reason that the loan had not been repaid.

But De Beers spokeswoman Anny Pereira said she was surprised that the government had raised the matter of the $50m.

She said that De Beers had offered to freeze this debt as soon as the government gave the company legal assurances over its long-term future in Angola.

History of partnership

De Beers and Endiama have been working in partnership, under the terms of a contract signed in 1990.

De Beers argued that the Angolan government had last year introduced legislation which rendered that contract invalid, and that after more than a year of talks there was still no agreement on the terms under which the international company would continue to operate in Angola.

But the government insists that negotiations had been continuing in a cordial manner, and that, as a gesture of good faith, it had offered to extend the validity of a mining concession due to expire this year.

Ms Pereira said that this missed the point - she said there was no reason to extend the concession areas, when the civil war meant that De Beers could only prospect in about 20% of the area it had been allocated.

Property of the state

The statement affirmed that, under the Angolan constitution, all mineral resources are the property of the state.

Analysts interpreted this as a coded warning to De Beers that it could not operate in Angola without the cooperation of the state-owned company.

But at the same time, Endiama is dependent on De Beers for the technical know-how needed for deep-level mining operations.

De Beers has expressed a willingness to resume negotiations with the government and Thursday's statement from Luanda does not rule out that possibility.

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