GABORONE (AFP) — Mining giant De Beers in Botswana has sold its 70 percent stake in African Diamonds due to plummeting demand for the gems, an official said Thursday 12 November.

Photo: AFP

The shares were sold for 49 million dollars (33 million euros) to Lucara Diamond Corporation, a Canadian firm. African Diamonds is listed on the London and Botswana stock exchange while Lucara is a Toronto-listed company.

De Beers said selling its stake became an option when the global economic crisis constrained the project to a smaller mining plan.

"Smaller mines do not fit into De Beers's global production portfolio, which is focused on large-scale projects that deliver superior rates of return and the right production volumes," said a statement.

The companies discovered diamond deposits in the Boteti district, central Botswana, and had been working on the AK6 deposit for the past six years but due to De Beer's different objectives they decided to part ways.

"There are only positives resulting from this development. We believe that AK6 is a world class diamond deposit," chairman of African Diamonds John Teeling said in a statement.

"It needs to be developed as quickly and efficiently as possible to benefit all stakeholders," he added.

The Chairman of De Beers Botswana, Stephen Lussier, said this is a win-win solution for diamond mining in Botswana.

"Smaller operators will have the opportunity to bring AK6 into production, helping to reinforce Botswana?s position as the world?s leading diamond producing country," he said

Mine development is expected in mid 2010, with production in late 2011.