De Beers is closing its Voorspoed mine after failing to find a suitable buyer for the 700,000-carats-a-year operation, but the department of mineral resources has stepped in to find a buyer before the end of August.

De Beers used the services of Standard Bank to help it sell the open pit mine near Kroonstad in the Free State and letters were sent to more than 50 parties, including the operators of other diamond mines in SA. However, none was able to meet the criteria set by De Beers of having not only the financial capacity to run Voorspoed, but to invest in capital to expand the pit and add another five years of life.

De Beers also wanted a buyer with the technical ability, credentials and reputation to take over the mine.

"Not one of the four final companies we were speaking to managed to meet all the criteria we set, so we’ve taken the decision to close Voorspoed," said Philip Barton, CEO of De Beers Consolidated Mines, the South African subsidiary of De Beers.

The mine has 386 employees and 500 contractors. Mineral Resources Minister Gwede Mantashe has spoken out strongly against mine closures and operations put into care and maintenance. Against this backdrop, discussions with the department’s Director-General, Thabo Mokoena, resulted in an agreement that the regulator would run a process to "identify and propose" an operator before the end of August.

Barton was clear that any buyer proposed by the department would have to meet the criteria laid down by De Beers. When the mine was opened in 2008, De Beers gave it a life of exactly 10 years. There was a small expansion of the pit that would extend its life by three to five years, but De Beers said it was not a financially viable project given the company’s overheads and cost base.

Once the mine treats its final ore in December, the closure process will begin, leaving De Beers just the Venetia mine in Limpopo, which the company is in the process of turning into an underground mine from an opencast one, at a cost of $2bn.

The closure of Voorspoed brings to a near close De Beers’ presence in SA, where it was once the colossus of the diamond industry for more than a century. In recent years it has sold large mines in SA to Petra, which has invested heavily in extending the lives of the Finsch and Cullinan mines.

While De Beers has 16 exploration permits in SA, it will not start work on them until there is clarity on the Mining Charter, which is expected to be gazetted by the end of 2018, said De Beers group CEO Bruce Cleaver.