De Beers Begins Closure of Voorspoed Diamond Mine

Mega diamond producer De Beers announced earlier this week it will begin the process of shutting down production at the Voorspoed diamond mine in South Africa.

The international diamond miner decided to close the mine after a “suitable operator that met specific criteria,” was not found.

De Beers was seeking a mine operator that encompassed both technical and financial capability, as well as values that aligned with those of  De Beers Consolidated Mines Proprietary Limited (DBCM), the branch which oversees mine operations.

“Unfortunately, we have not been able to identify a bidder that met the necessary criteria and so we have reluctantly taken the decision to close the operation, in a responsible manner, as it is no longer economically viable for DBCM to operate the mine,” Phillip Barton, CEO of DBMC said in a press release.

“We do not underestimate the impact this will have on Voorspoed mine employees and we have put in place appropriate support structures.”

However a reprieve for the African diamond mine may be attainable. Before the late July announcement, the mining giant engaged in discussions with the Department of Mineral Resources (DMR). The government agency had raised concerns about the precarious position local mine employees would be left in.

As such, the DMR’s director general requested that DBCM runs its closure process while the DMR continues to seek out a suitable operator capable of purchasing the Voorspoed mine.

The DBCM board has stated it is not opposed to the idea and has given a 30-day period, ending August 31, 2018, for a potential buyer and operator to be identified.

The Voorspoed mine is located 30km northeast of Kroonstad, in the free-state province of South Africa. Despite purchasing the mine in 1912, De Beers did not commence production at the site until 2008 with a mining license valid through 2023.

During peak production, the diamond mine produced 800,000 carats per year, an estimated 10-million carats were projected over the life of mine.

“When we opened the mine on November 4, 2008, the expected operating life of mine was approximately 10 years,” added Barton. “With a young workforce, the mine has been managed and operated in an exemplary manner, of significance being the safety achievements in 2017 for the ‘Best Safety Performance in Class’ and ‘Best Improved Safety Performance’ for no lost time injuries between October 1, 2014 and June 14, 2018.”

While De Beers withdraws from Voorspoed, the global diamond mining leader will still maintain a South African portfolio containing the Venetia Mine in Limpopo Province where the company is investing US$2 billion to take the mine underground and extend its operating life beyond  2040.

Don’t forget to follow us @INN_Resource for real-time updates!

Securities Disclosure: I, Georgia Williams, hold no direct investment interest in any company mentioned in this article.