Diamond producer De Beers expects its South African unit to produce 6.5-million carats in 2011, a million less than last year as the effects of mine disposals filter down, the unit’s chief executive said on Monday.
De Beers, one of the world’s top diamond producers, has since 2007 sold several of its South African mines including Cullinan, Jagersfontein, Namaqualand and Finsch, as it has moved to streamline its business to enhance profitability.
But unit CEO Phillip Barton remained bullish on exploration in the country that gave birth to De Beers, of which 45% is owned by global miner Anglo American and was founded in 1888.
“We’ll probably do a little bit more than 6.5-million carats this year because a portion of Finsch is still in for this year, but then from next year we’ll be down to about 6.5-million, and then we are quite confident we will produce that for a number of years ahead,” Barton told Reuters in an interview.
“So in future we will be about a 6.3 to 6.5-million carat producer per annum,” he said of the remaining three operational mines in South Africa once the Finsch mine is sold.
He said the company was looking through its data banks, some dating to the 1950s, as it sought new exploration opportunities.
“We are mining our data bank to get the target areas that we focus our exploration on. So we are, for that reason, very bullish about exploration in South Africa,” Barton said.
Barton said a recent strike hurt output only at the company’s top-producing Venetia mine and did not affect operations at the Kimberley and Voorspoed mines.
The board is expected to sign off on a potential R15-billion underground investment at Venetia when a feasibility study ends in 2012, which would be the company’s biggest South African investment in decades.
“The board voted R150-million for a feasibility study last year that will be concluded in May next year,” Barton said.
The company plans to expand underground operations at Venetia to extend the mine’s life to 2046 from 2021, with investment seen at R8.5-billion to R15-billion.
Barton said the sale of the unit’s Finsch mine to Africa-focussed miner Petra Diamonds should be finalised within the next couple of days.
A global rebound in diamond demand and prices, driven mainly by China and India, has augured well for the company’s prospects, and it expects strong consumer demand to continue for the rest of the year.
However, a global skills shortage is a concern as miners try to take advantage of red hot commodity prices, Barton said.
“We see that now becoming a global issue as the quest for commodities heats up. There’s a skill shortage and it’s not just a South African one, it’s a global skills shortage, and that from a risk point of view is close to our heart,” he said.
Parent De Beers, which contends with Russia’s state-owned Alrosa for the ranking of top global diamond producer and controls around 40% of the rough diamond market, reported total production of 15.5-million carats for the first half of this year. — Reuters