Sierra Leone diamond firm: from war booty to IPO

Wed Apr 4, 2012 1:39pm EDT
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By Simon Akam

KOIDU, Sierra Leone (Reuters) - Sierra Leone's only pit diamond mine has come far from its origins as wartime booty presented to mercenaries by a grateful military junta.

Seventeen years and several changes of ownership later, Koidu Holdings is selling gems in outlets such as U.S. jeweler Tiffany & Co. and considering a possible public listing, which could raise hundreds of millions of dollars to fund expansion.

While burnt-out houses surrounding the mine in the eastern town of Koidu serve as a reminder of the West African country's 11-year civil war, which claimed some 50,000 lives before it ended in 2002, Koidu's managers see the operation as a success story that augurs a better future for Sierra Leoneans.

"Conditions and the circumstances were completely different then from what they are today," said Chief Executive Jan Joubert, who is directing a $200 million expansion to more than quadruple output by July.

"The way we do things is an example of the way things could and should be done in Sierra Leone," Joubert told Reuters. The company has been owned since 2007 by billionaire Israeli diamond trader Beny Steinmetz's BSG Resources.

Joubert said a possible IPO was under discussion but declined to comment on media reports that Koidu is considering a flotation in Hong Kong, which would raise up to $400 million in the first listing there of an African company.

Industry analysts say a Hong Kong listing could attract strong interest from capital-heavy Chinese investors keen for exposure to Africa, even while the volatility typically associated with diamond shares puts off others.

"China is the fastest growing new consumer market for diamonds in the world," said Peter Major, mining consultant at Johannesburg-based Cadiz Corporate Solutions.   Continued...

Rough diamonds worth around US$10,000 sit on a sheet of doodled paper in the office of a Lebanese gem dealer in the town of Koidu in eastern Sierra Leone, March 2, 2012. REUTERS/Simon Akam