De Beers suspends exploration budget
De Beers suspends R40m exploration budget and considers taking Minister Zwane to court as applications to explore are stalled for up to two years
De Beers, which will be down to a single mine in South Africa from 2020, has 54 exploration applications stuck with the Department of Mineral Resources, some for two years, and has suspended its R40m annual exploration budget in the country.
The focus of De Beers Consolidated Mines (DBCM), the South African subsidiary of De Beers, the world’s largest producer of rough diamonds by value, is on bringing its $2bn Venetia mine into production and managing the transition from opencast mining to underground mining, minimising the anticipated dip in production at that time, said DBCM CEO Philip Barton.
While De Beers has patiently pushed for the exploration licences to be approved having exhausted all its other exploration permits but it is now coming to a point where taking the Department of Mineral Resources to court is being considered as an option if talks with Mineral Resources Minister Mosebenzi Zwane yielded no progress, Barton said on the sidelines of the Joburg Indaba mining conference.
Zwane said at a gala dinner on Tuesday night he and his department had an "open-door policy" for anyone with a problem to come speak to them. DBCM will put this to the test, Barton said.
The department’s third iteration of the now-suspended Mining Charter said companies applying for exploration permits needed to be 51% black owned. De Beers would not invest in projects in which it was the minority partner and had stopped the exploration budget for DBCM for 2017 and 2018 until the company received its permits.
De Beers will close its Voorspoed mine in the Free State in early 2020, having decided the cost metrics at the operation, which started in 2008, no longer fitted the company’s profile. There are resources left at the mine, but it would need an investment to expand the pit to reach fresh ore, an investment De Beers was not willing to make.
De Beers was considering whether it could sell the mine and would make the close or sell decision before the end of 2017, Barton said.
The opencast Venetia mine, which will deliver its first underground carats in 2021 and ramp up to full production from 2023, reaching 4.5-million carats of annual production, making it the third-largest mine in the De Beers group behind the monster Jwaneng and Orapa mines in Botswana.
DBCM is busy with work to improve throughput at the Venetia plant, which can now treat six-million tonnes of ore a year to cope with the underground production capacity of eight-million tonnes. This would lift carat production to six-million carats a year.