Beny Steinmetz Group to Float Sierra Leone Diamond Mine

Koidu diamond mine in Sierra Leone

The Beny Steinmetz Group, will soon issue an initial public offering for its Koidu diamond mine in Sierra Leone, according to the Financial Times and other reports.

The privately held natural resources company will issue its float on the Hong Kong Stock Exchange in later half of 2012 through a spinoff company called Octea, which serves as the holding company for the mine, according to the report. It will attempt to raise $400 million to $600 million and achieve a valuation of $2 billion to $3 billion.

BSG reportedly says the mine is expected to produce 500,000 carats this year and buyers of the its diamonds include Tiffany & Co.

It’s the latest attempt to take advantage of rising diamond demand in Asia along with dwindling supply. The Oppenheimer family, which owned a major stake in De Beers, sold out to its partner Anglo America for $5.1 billion. Russian diamond mining giant Alrosa is also reportedly attempting a listing. Other investment vehicles are being developed by luxury retailer Harry Winston, which has a 40-percent stake in the Diavik Diamond Mine in the Northwest Territories of Canada, diamond dealer Martin Rapaport, who is known for his Rap Diamond Price List, and Clive Cowdery, the founder of the U.K. insurance company, Resolution.

This float also highlights the dramatic changes of the diamond mining industry in the west African country. In the 1990s, the illicit use diamond mines were used by rebel groups to fund the attempted overthrow of the government and commit atrocities on its citizens, including mass murder, mutilations and virtual slavery in the diamond mines. It eventually led to ban of diamonds from the country.

The fact that Tiffany, which prides itself on being a good corporate citizen, is now sourcing diamonds from the mine showcases the international effort to end the abuse of the illicit diamond trade and its ability to bring stability to the country.