Lukoil Said Close to Hiring Ex-BHP Executive for Diamonds

OAO Lukoil, Russia’s largest non-state oil producer, is close to appointing BHP Billiton Ltd. (BHP)’s former diamond marketing head to sell the precious stones from its Grib mine, according to people with knowledge of the matter.

Lukoil is set to name Martin Leake head of diamond sales, the people said, asking not to be identified before an official announcement. Moscow-based Lukoil will sell the gems in Antwerp and seek to replicate BHP’s auction system, two of the people said. Leake and a spokesman for Lukoil declined to comment.

Lukoil plans to start production at the Grib mine in the Arkhangelsk region of Russia’s far north later this year and will produce more than 4 million carats annually starting 2016. The mine will be biggest to come into production in the world since Rio Tinto Group’s Diavik project in Canada in 2003.

Leake was general manager for diamond marketing at Melbourne-based BHP, the world’s biggest mining company. BHP sold its Ekati diamond mine in Canada and its marketing operations for the stones to Harry Winston Diamond Corp., now Dominion Diamond Corp. (DDC), for $500 million last year, exiting the business as it focused on other commodities with larger mines.

In 2008, Archangel Diamond Corp., or ADC, then controlled by De Beers, agreed to pay $225 million for a 49.9 percent stake in the Grib pipe project to end litigation over the field’s ownership rights. De Beers walked away from the deal after Russian authorities asked the company to polish diamonds in the country as a condition for the transaction. Lukoil now owns 100 percent of the project, while ADC filed for bankruptcy.

OAO Alrosa, Russia’s state-controlled diamond monopoly and the world’s biggest producer by volume, mined 34.4 million carats last year. De Beers, which typically produces stones that fetch higher prices, had output of 27.9 million carats.

To contact the reporters on this story: Thomas Biesheuvel in London at tbiesheuvel@bloomberg.net; Eduard Gismatullin in London at egismatullin@bloomberg.net

To contact the editor responsible for this story: John Viljoen at jviljoen@bloomberg.net

Bloomberg reserves the right to remove comments but is under no obligation to do so, or to explain individual moderation decisions.

Please enable JavaScript to view the comments powered by Disqus.