Fipb Clears 100% De Beers Subsidiary

The Foreign Investment Promotion Board has permitted diamond mining and marketing giant De Beers to set up a 100 per cent subsidiary in the country. The diamond major already has a 50:50 joint venture with Reliance Industries Diamond Prospec-ting (DPPL) for prospecting and mining diamonds.

De Beers has proposed to invest $400 million in joint venture mining activities in India, while insisting on carrying out the initial prospecting through its wholly owned subsidiary.

De Beers had sought the governments permission to invest in a 100 per cent subsidiary Adamas-India which would undertake prospecting. The South African giant proposes to pump in $30 million in three phases, over a period of five years, into its subsidiary. The investment will be routed through De Beers Mauritius Private Ltd.

A senior De Beers executive said the company decided to set up a wholly-owned subsidiary to undertake prospecting since different state governments are likely to come out with specific norms for tender processes in their respective states.

A wholly owned subsidiary would enable the company to take appropriate decisions on equity holding in the various joint ventures the company may need to set up in different states like Orissa and Madhya Pradesh.

We want to be ready to participate in the tender process in whatever form the government decides. At this moment, we are not sure what level of equity holding the different state governments will stipulate. Hence, the need to set up a 100 per cent subsidiary, said the executive.

The government clearance comes at a time when the Madhya Pradesh government has invited offers for formation of a joint venture company with the Madhya Pradesh State Mining Corp for survey, exploration and subsequent exploitation and marketing of diamonds in 11 blocks of the state, each measuring 5,000 sq km. The MP State Mining Corporation made the announcement last week.

Two of the worlds biggest mining companies, CRA-RTZ and De Beers, are battling it out in MP for diamond prospecting licences. The public sector National Mineral Development Corp is also in the fray.