Anglo American CEO Mark Cutifani says Venetia can be brought into production a year earlier than the 2022 target. Picture: HALDEN KROG/BLOOMBERG
Anglo American CEO Mark Cutifani says Venetia can be brought into production a year earlier than the 2022 target. Picture: HALDEN KROG/BLOOMBERG

De Beers will bring its $2bn Venetia underground mine in SA into production a year earlier, bringing the largest project in its stable into earlier cash flows. This will allow the group to set a 37-million carat target by 2021.

De Beers, which is 85% owned by Anglo American, is the world’s largest source of rough diamonds by value.

Venetia is the last mine De Beers has left in SA, its birthplace, and it is moving the operation from an open pit to a 1km-deep underground mine, with production expected to start in 2022. Venetia is important because itproduces about 40% of SA’s annual diamond output.

The cooperation between De Beers and Anglo was manifested by the work done by Bruce Cleaver, CEO of De Beers, and Tony O’Neill, Anglo’s technical director.

“Bruce and Tony got together and looked at the ways we could improve the efficiencies on that project. With that we think we can bring it in a year early, another good outcome from work done at grassroots level,” Anglo CEO Mark Cutifani said in an analysts’ call.

Anglo chief financial officer Stephen Pearce said: “Life extension capex is up a bit from prior guidance at Venetia underground because development progress is ahead, bringing that capex forward, which drives highly valuable early diamond flows and is NPV (net present value) accretive.”

Asked what changes had been made at the project and what the implications were for the $2bn capital expenditure number and what kind of cash flows could be expected, De Beers’ spokesperson Jackie Mapiloko, declined to be drawn.

“We have incorporated new infrastructure and mine design options to bring forward the access to the ore bodies,” she said.

“This entails a raise-bore shaft and an underground in-pit decline which will allow faster access to the ore bodies. Although this brings forward some development cost, the cumulative impact on cash flow and NPV is positive.”

The raise-bore shaft will be used for hauling ore out of the mine.

No mention was made in the early plans for such a shaft, instead what was  mentioned were two vertical shafts with diameters of 7m each and a depth of 1,080m.

A raise-bore shaft can only be drilled if there is underground access from a tunnel or working area.

seccombea@bdfm.co.za