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Sustainability of major player highlighted at first Diamond Indaba

LASTING INDUSTRY
De Beers is initiating several projects and campBROAD EFFECT
The weaker global demand for many commodities also has its impact across the diamond pipeline, from producers to beneficiators and retailersaigns to ensure diamond industry longevity and sustainability

LASTING INDUSTRY De Beers is initiating several projects and campBROAD EFFECT The weaker global demand for many commodities also has its impact across the diamond pipeline, from producers to beneficiators and retailersaigns to ensure diamond industry longevity and sustainability

11th December 2015

By: Donna Slater

Features Deputy Editor and Chief Photographer

  

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Diamond miner De Beers is undertaking various projects and initiatives together with stakeholders to promote the prospects of the longer-term sustainability of the industry.

One of the most significant is by stimulating the market for diamonds at a time when it “finds itself in difficult times”, says De Beers Consolidated Mines (DBCM) chairperson Barend Petersen. He spoke at the inaugural South African Diamond Indaba hosted by the Department of Mineral Resources in October at the Sandton Convention Centre, in Johannesburg.

The weaker global demand for many com-modities has also had an impact across the diamond pipeline, from producers to beneficiators and retailers, he notes.

De Beers’ R20-billion investment of in-house funding in its Limpopo-based Venetia mine – which is being converted from an openpit operation to an underground mine – emphasises the miner’s long-term positive view and strategy to meet what will be a supply-demand gap in the diamond market, Petersen points out.

“We expect the first ore and, therefore, first cash from the underground mine in 2021. DBCM also foresees that the underground mine will be fully ramped up in 2024 and an extended life of the mine into the 2040s.”

Amid current trading conditions in the diamond industry, however, production at DBCM, in South Africa, has decreased 8% to meet reduced demand, to one-million carats in the third quarter of 2015, reducing throughput and the processing of lower grades at Venetia.

The industry is struggling with soft demand and a weak diamond price, with De Beers having cut its 2015 diamond output by 12% since the start of the year. De Beers’ initial full-year guidance of 32-million carats to 34-million carats was reduced to between 30-million carats and 32-million carats in late April, and then to 29-million carats in October.

This action helps address the stock overhang faced by the industry and De Beers is assisting its sightholders (clients) who want to defer and replan their purchases.

The miner is also ensuring that its rough diamond prices are sustainable. It has for decades developed the capacity to address synthetics in the market, similar to the success of emeralds preserving the intrinsic value of natural gems, while it continues to manufacture and distribute synthetic-diamond detection machines to reinforce market confidence.

In addition to De Beers’ Forevermark brand, the company also announced at the recent Jewellex Trade Fair, which was held alongside the Diamond Indaba, that it had launched major generic marketing campaigns in the key diamond consumer markets for the first time in many years.

Further, the miner’s Accredited Buyer status, which forms part of its current sales model, enables diamond businesses that have not been able to demonstrate scalable diamond demand, but meet the ‘gating’ criteria of being a sightholder, to be supplied by De Beers until they meet the sightholder requirements.

Petersen says that the status would provide another channel for medium-sized beneficiators to buy more rough diamonds, thereby enabling them to develop and sustain their competitive businesses.

“Beneficiators are closing their operations, not only in South Africa but also globally,” he says, adding that current market conditions were resulting in bankruptcies globally. “The number of local diamond cutters and polishers has also declined significantly, with current estimates being around 300 personnel, but Petersen believes that this estimate might be “optimistic”.

However, he highlights the Mining Phakisa, which took place in November in Limpopo, as an attempt to make headway into difficult industry conditions. “This is a collaborative process, convened by government, but involving a range of key stakeholders to plan and oversee the implementation of initiatives that will have a positive catalytic impact on the economy and society.”

Mining Phakisa outlines next-generation beneficiation as a work-stream, which Petersen interprets as “the need to consider innovative ideas on how we can facilitate local beneficiation, taking into consideration future development”.

Based on the calibre of delegates who attended the Diamond Indaba, he is confident that the South African diamond industry is in the hands of people who are committed and have a vested interest in seeing it stabilise and grow to sustainable levels.

Learning from Others
Petersen highlights India’s ability to establish and develop its diamond beneficiation industry into a thriving business.

“The Indian [diamond] manufacturing sector . . . chose a niche for its industry, focusing on small and poor-quality diamonds. It also significantly invested in technology and human capacity [to beneficiate diamonds],” he explains.

The Indian diamond market is well estab-lished, which is enabling it to focus increas-ingly on not only manufacturing technology but also its beneficiation industry to handle bigger diamond-size ranges.

India is, therefore, increasing its diamond industry’s growth prospects by manufacturing a broader range of goods, adds Petersen.

In South Africa, diamond beneficiation stakeholders need to adapt with a commercially driven mindset rather than a social imperative, he stresses. “Beneficiators operate businesses and any support provided to them must be within this context, failing which, they will not be able to compete on the open international market.”

However, empowering local beneficiators is not possible without mining operators, states Petersen, adding that the converse is also relevant – the sector needs to realise competitive prices to create sustainable production and mining operations that can grow to create employment and facilitate investment in local communities.

Edited by Tracy Hancock
Creamer Media Contributing Editor

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