Potential buyers of De Beers’s Voorspoed mine, which is nearing the end of its life and needs a capital injection in about two years to extend it, should consider combining it with the nearby suspended Lace mine.
The Lace underground kimberlite mine near Kroonstad in the Free State was on the cusp of production when it ran into a perfect storm of a flooded mine, damaged equipment, a difficult union and no cash or prospect of raising some in the near term.
The mine was put into business rescue at the end of 2016 and has since remained idled, heightening speculation that a smart buyer could combine Lace and Voorspoed into a single unit, gaining access to two rare diamondiferous kimberlite deposits. Unlike Lace, Voorspoed is an operating mine, with development potential and tailings dating back decades that can also be harvested for diamonds.
De Beers has long said Voorspoed, opened in 2008, would be closed in 2020 because it did not see the economic sense in investing further capital in expanding the pit or going underground at the mine. De Beers expected the mine to generate 10-million carats from a relatively low-grade kimberlite.
While Petra Diamonds, the main beneficiary of De Beers’ radical sale of four South African mines, might want to participate in the purchase of Voorspoed and possibly Lace, questions will likely be raised by competition authorities about its increasing dominance of sizeable South African diamond output and asset base.