De Beers Consolidated Mines’s (DBCM) R1-billion sale of its Cullinan diamond mine in Pretoria to the Petra Diamonds Cullinan Consortium (PDCC) has taken an important step forward with Monday’s announcement that the Department of Minerals and Energy has agreed to convert the old-order mining right held by De Beers into a new-order mining right.
The PDCC comprises Alternative Investment Market-listed diamond-mining junior Petra Diamonds and Saudi-based investment company Al Rajhi Holdings, as well as their empowerment partner, Thembinkosi Mining Investments.
Thembinkosi’s shareholders include Sedibeng Mining, Namoise Mining, Umnotho weSizwe Group and the Petra Employee Share Trust.
The sale, announced last month, is considered a “transformational deal” for Petra and creates new players in the diamond industry.
The second-largest producer of diamonds in South Africa after De Beers, Petra Diamonds also has operations in Angola, Botswana and Sierra Leone.
Petra said completion of the transaction is now conditional on ministerial consent to the cession to the PDCC of the new-order mining right in respect of Cullinan, and the Department of Minerals and Energy consenting to the cession, transfer and delegation of the rehabilitation obligations and liabilities in respect of Cullinan from De Beers to the PDCC.
Other conditions include South African competition authority and regulatory approvals.
Petra said it is expected that the remaining conditions will be met between May and July next year.
Petra, whose share of the acquisition price is R325-million, also acquired the Dancarl mine in the Barkly West district of the Northern Cape and the Koffiefontein mine in the Free State from De Beers.
It also reached an agreement with DBCM to purchase the company’s Kimberley underground mines in September 2007, which the parties hope to finalise by early 2008.
De Beers said to date these three transactions have secured 1 050 jobs that would otherwise have been lost in South Africa.
The diamond giant said this deal allows it to adjust its South African mining portfolio, releasing capital from marginal operations that other companies are better placed to manage.
“In the past year, the sale by De Beers of mining operations to BEE [black economic empowerment] consortiums has enabled us to focus our management attention on building two new mining operations, Voorspoed in the Free State and the Peace in Africa marine mining operation in the Northern Cape, while simultaneously investing in capital and other improvements at our established mines,” said David Noko, MD of DBCM. — I-Net Bridge