De Beers looks hard at its future in Kimberley

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DE BEERS may be coming to the end of its involvement in Kimberley after more than a century of mining diamonds there and creating what for decades was the world’s largest source of rough diamonds.

DE BEERS may be coming to the end of its involvement in Kimberley after more than a century of mining diamonds there and creating what for decades was the world’s largest source of rough diamonds.

De Beers will have a clearer idea of its involvement in Kimberley, where it is retreating a tailings dump, in the next six months as those operations come to the end of their life in 2018, De Beers Consolidated Mines chief executive officer Philip Barton said.

De Beers Consolidated Mines was formed in 1888 to mine five kimberlite pipes in Kimberley. It sold its underground mine there to Petra in 2010. In 2012, Kimberley generated 755 000 carats for De Beers.

Barton said there are three options open to De Beers in Kimberley. These are to find new technology and mining methods to tackle tailings dumps where the grade is too low to be extracted economically, or to mine the dumps it has and close the operations.

A third option is to sell the assets to another party that has lower overheads and can economically tackle all the resources.

“I have a project running so that in the next six months, more by a process of elimination, we’ll know which of these options are not workable,” he said.

SBG Securities analyst Tim Clarke recently speculated that De Beers could sell its Kimberley operations as well as its Voorspoed mine near Kroonstad in the Free State, leaving the company with just the Venetia mine in Limpopo.

“Voorspoed still has a life until 2021. It doesn’t take any of my time. It generates good profits and cash.

“Why would I be interested in rocking that particular boat?” Barton said.

One asset De Beers is trying to sell is its Namaqualand mine on the West Coast of SA and Barton expects the transaction — in which Japan Stock Exchange-listed alluvial diamond miner Trans Hex is a party — to be concluded before the end of this year.

Barton said there are no assets De Beers would like to buy in South Africa.

“That’s why we’re focusing so much on exploration because we’ve not seen anything in particular that we want.”

Last year De Beers returned all the diamond mining rights it held for the sea areas off South Africa’s West Coast after spending more than R1,5 billion over 30 years of exploring that area.

It spent millions more mining the seabed, but did not make a profit because of poor diamond grades.

“We just didn’t have the grade they have in the Namibian sea area,” Barton said.

The company has retained a small number of prospecting rights off the coast to “answer some remaining questions around heavy minerals”. – BDLive