Strong rand hammers SA gem-mines Global diamond giant De Beers...

Strong rand hammers SA gem-mines

Global diamond giant De Beers said on Friday that its South African operations were taking a hammering from the strong rand, which was forcing it to focus on efficiency and cost-reduction.

Managing director Gary Ralfe said the group’s South African operations – the De Beers Consolidated Mines (DCM) – were “under constant review”, as five of its seven mines in this country came in at a loss for the first six months of the year.

“We are doing all we can to keep these mines open and we are conscious of our social responsibility as a good corporate citizen,” Ralfe told a conference call.

“We are concerned about those mines whose cash-flow is negative, but we need to balance economics with the responsibility of De Beers as a long-term employer and a good corporate citizen.”

He revealed that the Koffiefontein, Kimberley underground, Small Oaks, Cullinan and Namakwa mines were currently operating at a loss.

The bulk contributor to DCM’s first-half production was the Venetia mine, being the main reason for the step-change in South Africa. DCM produced 16% more during the period under review than it did during the corresponding period last year.

De Beers is currently looking at debottlenecking the Venetia operation, so that it can process about 5,9-million tons of material a year.

Ralfe said the group would also focus strongly on driving down costs and increasing efficiencies at the Cullinan mine, near Pretoria, which can currently produce 1,5-million carats a year and has an extended mine-life under the multibillion-rand C-Cut project.

The Kimberley underground mine is also an operation which De Beers is eager to save, as it is tipped to produce some two-million carats this year, in conjunction with the reworking of its dumps.

“We are hoping that a higher diamond price and a weakening of the rand – which we haven’t seen – would bring some relief,” Ralfe commented, adding that the company would do everything it can to avoid mine closure and retrenchments.

“If these mines were closed they would never be restarted again, the cost simply be too great,” he concluded.