Junior miner Petra Diamonds, which bought the Kimberley underground operations from De Beers, the largest diamond miner, for R78,5-million, said on Friday that it aimed to have the mine back in production in the next six to twelve months.

The historic operation had been closed in 2005, after its large cost structure made it unprofitable for De Beers to carry on operating the mine.

But De Beers group chairperson Nicky Oppenheimer said that Petra’s cost structure would allow it to better operate the Kimberley underground mine.

Petra, which also bought the Koffiefontein mine from De Beers last year, was hoping to produce some 120 000 t/y from the Kimberley underground operation by 2008.

The Koffiefontein mine, which had already been reopened, would produce in the order of 100 000 ct/y, taking Petra’s yearly diamond production to about 400 000 ct/y.

CEO Johan Dippenaar said at a media conference, in Johannesburg that this would grow the junior mining company to a midtier producer, he added.

Based on historical production and sales information , Petra was expecting gross annual revenues of more than $16-million.

Petra would operate the Kimberley underground mine in a joint venture with its black economic-empowerment partner, Sedibeng Mining, and, would assume responsibility for the full care-and-maintenance of the underground mines from Friday.

Acquiring the mine from De Beers was giving the “historic mine a new lease of life”, Dippenaar said, adding that the company was planning to operate the mine more or less for another ten years.

Petra could spend another R70-million to R80-million on the Kimberley underground operation. In the first year, the company would invest between R20-million and R25-million, he told reporters.

De Beers embarked on a review of all its assets last year to streamline the business and position itself for future growth by focusing its resources on the mines that were fitting the company’s new strategy. The group's global strategy had moved away from only maximising market share of its production.

“We believe that there are opportunities for other players to take advantage of those assets that may not have a strategic fit with what we are doing,” DBCM, the local arm of the De Beers group, MD David Noko said.

He said that the agreement with Petra was an indication of the company’s commitment to encourage wider industry growth and facilitate competition in the South African diamond industry.

But, Noko said that De Beers was not simply planning on “handing over the game”.

“We have no intention of giving up our leadership position.”

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