De Beers, the world's biggest diamond producer, and Russia's gem firm Alrosa signed a pact on September 06 to pursue joint prospecting projects in Russia and other parts of the world.
The deal will give De Beers access to enormous potential diamond prospects in Russia, while Alrosa may benefit from De Beers' long-standing links with Africa. "We believe that if we were looking for a partner in any guise, then Alrosa and De Beers are the natural partners," De Beers Chairman Nicky Oppenheimer told Reuters.
Together the two groups account for 75 percent of the global diamond market.
"We believe that both partners have skills which may be helpful to each other," he added in an interview shortly before signing a memorandum of understanding in Cape Town.
Alrosa boasts cutting-edge technology in developing mines, which may compliment De Beers' efforts to halve the time it takes to bring a mine to production from an initial feasibility stage.
"The future of the diamond business is very exciting and because of our 50-year relationship I would really like to find something that can fit into the constraints in which we operate," Oppenheimer said.
De Beers buys gems from Alrosa to distribute but pledged in February to phase out these purchases of rough diamonds from 2009 to settle a long-running monopoly abuse case with the European Commission.
He stressed that any joint operations would have to be in accordance with European Union restrictions.
The deal is part of a series of agreements signed by South African and Russian business figures during the state visit of Vladimir Putin, the first ever by a Russian President.
The co-operation is expected to be in greenfield projects, but the partnerships in Africa are likely to be determined largely by existing agreements in particular countries.
De Beers, 45 percent owned by mining group Anglo American Plc and 40 percent owned by the Oppenheimer family, has been pumping money into exploration as it faces increased competition and the need for better technology to reverse declining new mine discoveries in recent years.
The company has operations in several Africa states but is focusing much of its attention on Angola and the Democratic Republic of Congo, diamond-rich states that were shut off from formal mining during devastating civil wars.
Alrosa is already established in Angola. "I think they (Alrosa) would like to extend out beyond Russia and, again, those are the things that we will be thinking of working together on," Oppenheimer said.
"We think we have particular skills in prospecting and anywhere where there is a chance of finding diamonds De Beers would like to be on the ground looking."