Mining’s old guard needs strong medicine
A new report details subpar investor returns in the mining industry over the last decade, particularly big cap diversified companies which have not adapted to new realities.
De Beers, the world’s largest rough diamond producer by value, said Tuesday it had decided to proceed with the closure and rehabilitation of its Voorspoed diamond mine in South Africa.
The Anglo American unit said the move followed an extensive disposal process, which involved a rigorous due diligence exercise on the bidders to acquire Voorspoed.
The plan was that an operator with a lower cost structure or a different mining approach would be able to take over and extend the mine’s life to 2020. Voorspoed was opened by De Beers in 2008 with a proposed 10-year life of mine.
De Beers will run a 30-day search to find an operator able to take over Voorspoed, in a last effort to save the mine.
The company, however, concluded there were no suitable potential buyers — an operator capable of exhibiting a record of success technically, financially, and socially to sustainably operate the mine, located in Kroonstad, Free State.
“We have reluctantly taken the decision to close the operation, in a responsible manner, as it is no longer economically viable for De Beers Consolidated Mines (DBCM) to operate the mine,” Phillip Barton, DBCM chief executive officer, said in the statement.
“We do not underestimate the impact this will have on Voorspoed Mine’s employees and we have put in place appropriate support structures,” he noted.
In light of the imminent job losses, South Africa’s Department of Mineral Resources (DMR) has asked DBCM to throw a lifeline to Voorspoed by running a process parallel through which the company would strive to find an operator capable of purchasing the 700,000-carats-a-year operation.
As a result, De Beers will run a 30-day search, to be kicked off August 1, in its last effort to save Voorspoed.
Diamond exploration in South Africa is at multi-decade lows due to increasing red-tape in the granting of prospecting licenses. De Beers itself, which will be down to a single mine in South Africa after the closure of Voorspoed, has 54 exploration applications stuck with the Department of Mineral Resources, some for two years.
The company is currently spending $2 billion on its last South Africa asset, the Venetia underground project, which will extend the life of the mine, in Limpopo Province to 2040’s.
Voorspoed, one of South Africa’s largest diamond mines, is not the only operation De Beers is planning to close. In November, the company announced it was shutting its Victor mine, the first and only commercial diamond operation in the Canadian province of Ontario, in early 2019.
De Beers is also said to have decided to close four mines in Namibia by 2022, Mineworkers Union of Namibia Oranjemund branch chairman, Mbidhi Shavuka, told The Namibian Sun (subs. required) last year.
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Do the right thing
Reposted- Well Malema and Gwede here’s your test case nationalize this mine and bank ,take VBS bank find the capital and take on the existing employees, skill them , house them , pay them and take over the operations it’s for free and you can apply your very own mining charter principles and expropriate the land without compensation…. easy peasy , you don’t need any whites, Indians or coloreds it can be the first fully black run and funded operation, show us what you can do…… get this right and I’ll eat my words that bee , ee etc is unworkable and racists, to work every SA is required to make SA Great Again, like a domkop like Trump says, I guess we won’t hear a word from Malema and Gwede now………we’ll Malema here’s your test right in front of you, I’m sure there are millions of black investors ready to recapitalize the mine via VBS bank and give up 51% for beee investment…….Talk is cheap, show all EFF and ANC voter the benefits of the new mining charter and nationalizing all mines and banks proposal Malema …. show us all how this model will fund SA before rolling out these pie in the sky ideas in one Big Bang approach