JOHANNESBURG (miningweekly.com) – International diamond giant De Beers is investing heavily in the improvement of its production capacity this year, committing “a great deal” of capital to major expansion projects at its existing operations and to developing new deposits.

Speaking at an event on Tuesday, CEO Philippe Mellier said 2014 provided an “instructive snapshot of where we are going and how we are shaping the future to prepare for success”.

“The product we sell is scarce and becoming scarcer. We operate in a fairly long and complex supply chain. We are experiencing shifts in consumer trends and increased competition from other luxury categories. Despite this, we have the potential to make the next few years among the most successful ever for diamonds,” he explained.

In Botswana, the company continued with its significant investment in the Cut-8 project at Jwaneng, which was currently estimated to deliver over 100-million extra carats.

The first batch of carats had been recovered from the $93.75-million Jwaneng modular tailings treatment project, which was expected to treat 2.4-million tons of old tailings a year and was expected to yield 18-million carats over 20 years.

This would add 900 000 ct/y. In 2013, Jwaneng produced 10.4-million carats, which is expected to increase for 2014; industry estimates are about another million carats. The plant would serve as a pilot facility with the potential for deployment to other Debswana mines.

In South Africa, the Venetia underground project would extend the life of South Africa’s largest diamond mine to 2044. Last year, significant progress had been made with regard to the main aspects of construction and the project was expected to deliver over 80-million more carats from this deposit.

Mellier also mentioned the recently opened Sendlingdrift mine, in Namibia, noting that it formed an important part in the extension of the Namibian operations’ lifespan and would bolster De Beers’ production capacity in the years ahead.

Citing results from the De Beers’ Diamond Insight Report 2014, Mellier said that it “showed us that the opportunity for diamonds is perhaps stronger than ever before” – adding that growth in demand for diamonds was set to outstrip growth in supply.

The report also highlighted that even in the most pessimistic scenario, the company could expect real positive demand growth for diamonds in the years ahead, “thanks to the traditional engine of US demand [which was expected to deliver a 7% growth rate in overall market value], coupled with growing demand from the East as more Indian and Chinese middle-class consumers choose to buy diamonds.

“It also showed that diamond supply is forecast to plateau and then decline after 2020. In short, it revealed an industry in which all parts of the supply chain can capture opportunity if they respond effectively now,” he pointed out.

FOREVERMARK
Mellier noted that the company’s success was also cemented in its Forevermark brand, adding that it answered consumers’ growing desire for branded products that could evidence their ethical credentials.

In 2014, the company inscribed its millionth Forevermark diamond, with 369 000 diamonds being inscribed in the year alone, a 47% increase from 2014.

“Forevermark provides the opportunity for additional margin to be captured and, to date, we have seen Forevermark jewellers consistently achieving 10% to 15% premiums above equivalent generic diamond jewellery,” Mellier stated.