South Africa lacks a healthy junior exploration and mining sector, when it could be a catalyst for growth and transformation in the sector, says the South African Diamond Producers Organisation (Sadpo).
For example, the discovery of alluvial diamonds in the unique secondary deposits of the Middle Orange River downstream of Hopetown in 1867 was the catalyst that initiated the development of the mining industry in Southern Africa.
Sadpo representative Lyndon De Meillon says that, compared with the junior diamond mining sector’s heyday between 1990 and early 2000s, today’s sector is a shadow of its past.
“In 2000, prior to South Africa’s changes to mineral policy ownership and regulation, and introduction of new ownership requirements, this key industry supported about 2 000 small and medium-sized private and listed operators.”
A study by Sinazo Dlakavu of the AEON Institute at Nelson Mandela Bay University, published last year, has shown that this has decreased to about 200 operators, a decline of 90%.
A small part of this is owing to geological factors, but for the most part, this is owing to ineffective mineral policy, challenging regulatory requirements and excessive red tape, says the organisation.
Sadpo has noted that diamond production in South Africa in 2018 amounted to about 9.25-million carats. Kimberlites produced 9.03-million carats, with De Beers and Petra Diamonds accounting for roughly 4.68-million carats and 4.35-million carats, respectively.
Other, smaller kimberlite operators produced about 10 000 ct, while alluvial deposits and marine deposits accounted for about 160 000 ct and 50 000 ct, respectively.
“The above-mentioned statistics indicate a strong decline in South Africa’s diamond production from 15.8-million carats in 2005, with consequent negative impacts for the economy, foreign earnings, employment, and communities in key mining provinces and areas,” notes Sadpo chairperson Gert van Niekerk.
He adds that this is especially true of the Namaqualand area on the West Coast of South Africa, and equally true of the Northern Cape – including the once famous diamond centre of Kimberley – and the North West province.
Sadpo stresses that the situation should not be as dire as it has become, given the upside remaining widespread and with voluminous alluvial diamond deposits in Namaqualand, the Northern Cape and the North West province.
“These extensive secondary or alluvial diamond deposits were formed through millions of years of weathering and denudation of the southern continent and the dispersal of diamonds from their primary sources (kimberlites) into streams and rivers, and ultimately to the West Coast.”
Van Niekerk says the unique small-scale and junior diamond sector has provided a platform for exploitation of these deposits, developed over a lengthy period of time, with hard-earned experience, skills and expertise, assisted by innovative geological work, drilling, digital terrain and three-dimensional modelling of drill data, drones, and modern diamond processing and recovery techniques.
He explains that while there are a few small listed operations, the companies generally find it difficult to survive when mining these ultralow-grade, low-margin deposits, owing to their higher cost structures related to compliance and financial reporting.
“Regrettably, the one-policy-fits-all approach, and the red tape imposed by the various government [departments and] agencies are particularly disadvantageous to the junior mining sector.”
South Africa still has a large enough resource to sustain diamond mining operations for at least another century.
Given the positive role that these operations and mines can play in creating jobs in poor provinces and rural areas, there should be a concerted effort by policymakers to ensure that the legislative and regulatory regimes are revised to create an enabling environment for this sector, Sadpo states.
Van Niekerk and De Meillon suggest that a small miners development fund to drive transformation and job creation should be established and that access to information and technical assistance from the Council for Geoscience and Mintek should be a priority for juniors.