Over its life-of-mine, the De Beers-owned Venetia diamond mine, in Limpopo ,will create significant direct and indirect economic benefits, along with long-term employment and procurement opportunities, says the diamond producer.
This project, which represents De Beers’ largest-ever investment in South Africa, will produce diamonds that will be bought for generations to come, says the company, adding that some of these diamonds will have been beneficiated by De Beers’ downstream clients manufacturing in South Africa.
Since 2006, the company has pursued a strategy to reshape its mine portfolio in South Africa to improve the value of every carat produced and to be more agile in meeting customer demand.
De Beers says diamonds are a finite resource, and a loss of economic activity is inevitable once a mine has been exhausted or when maintaining it becomes economically unviable.
Rather than close a mine or leave it dormant within the company’s portfolio, De Beers aims to protect some employment and introduce operators specialising in mature smaller-scale mining, thereby maintaining revenue generation for producer countries by selling mines to smaller operators with a lower cost base, or to companies that specialise in generating value from late-life mines.
This approach has, in some instances, released capital – such as in the sale of the Kimberley-based Finsch underground diamond mine to London-listed mining group Petra Diamonds – enabling De Beers to introduce consortia with credible operating records, empowerment credentials and representatives drawn from community or gender groups.
With the backing of its shareholders Anglo American – which has an 85% share – and the Republic of Botswana, De Beers is focusing on improving the life and revenue generation of larger or more profitable midlife mines, such as Venetia.
In planning for the development of transitioning Venetia mine from an openpit mine to an underground operation, De Beers looked beyond the technical challenges, as well as the direct and indirect economic benefits of the project, and focused on the project’s impact on South Africa, in general, and Limpopo, in particular.
The company expects the project to cost $2-billion during the building phase – from 2013 to 2021 – and expects it to contribute $19.9-billion towards the South African economy between 2012 and 2043, $7.8-billion of which will be a direct contribution.
Between 2021 and 2039, De Beers estimates that the Venetia underground operation will support 6 625 South Africans yearly. Further, in addition to the 1 482 employees who are and will be working for Venetia’s underground development, 5 143 people are expected to be employed elsewhere in the South African economy, as a consequence of the expansion project. This means that for every direct De Beers employee, 3.5 jobs will be created, owing to the Venetia underground development. During the construction period between now and 2021, construction employment is set to peak at about 4 000 related jobs.
Meanwhile, De Beers tells Mining Weekly that the delay in starting up the project, owing to regulatory and approval procedures was a setback for the project.
Current production of Venetia’s surface mining operations is 6 Mt/y of kimberlite. The waste-stripping production to open up reserves for mining is currently 40 to 42 Mt/y. Waste stripping will continue during the remainder of openpit production until ore from underground operations begins to flow in 2021.
Shaft sinking and tunnelling at Venetia’s underground operation has been under way since March 4, when the first blast for the decline was conducted. This officially signified the start of underground operations on the project and the decline development will continue unabated down to 1 000 m. The decline tunnelling had already advanced to 70 m by June 10.
However, De Beers tells Mining Weekly that the initial project plan schedule was delayed by about 12 months, but adds that the project team has advanced well and already halved the backlog, despite the setback.
In 2021, when the first diamond-bearing ore from the underground mine gets delivered to the metallurgical plant, the openpit sourced ore will cease flowing.
To avoid disrupting training and development for Venetia’s opencast operation, an additional training facility has been set up in Musina to manage the influx of contractors during the construction phase of the underground project. This training facility will ensure that all contractors and employees entering the construction site receive the correct and relevant induction, security and safety training, according to De Beers standards.
Technical training and certification requirements for local contractors and their employees is a principal focus of De Beers’ construction safety programme. The training programmes implemented prior to the start of construction will initially be facilitated by construction contractors. However, as precommissioning and commissioning facilities are completed, this responsibility will be taken over by De Beers.
Each employee who undergoes technical training is given a skills logbook, which is managed by the contractor. This book records the work each employee contributes to the project, as well as the training that was received. This is aimed at helping employees with their future careers by providing a verifiable record, thereby assisting in opening opportunities for work at other projects, following their experience at Venetia.
Besides its commitment to education, De Beers also introduced a teacher subvention programme to three local schools in the area to support the upskilling of educators. Through this programme, the company provided funding to support additional maths and science educators. The company has also prioritised providing scholarships to academically deserving learners who need financial assistance. Through the teacher subvention programme, De Beers provides schools with grants to improve the quality of education, which forms part of the company’s corporate social investment.
Moreover, De Beers’ Venetia mine employs an operating model that uses local suppliers for many of its activities, with a focus on promoting regional black economic empowerment through the facilitation and transfer of business and entrepreneurial skills.
The services procured locally during the openpit mine’s operational build-up include building services, housing maintenance, garden services, painting services, civil works and ad hoc services, the supply of hardware and stationery, the cleaning of mining equipment, and canteen services.
De Beers highlights that 51% of the procurement spend for 2013 was spent locally, and that Venetia mine is making a significant contribution to the local economy through the preferential procurement of goods and services.
A total of R1.23-billion was spent through entities held by historically disadvantaged South Africans operating in the Limpopo area.
Further, various supplier days are held in the local municipalities to showcase local suppliers, exposing them to possible business opportunities. A total of 248 suppliers attended these three events in 2013.
De Beers Investment
The role of De Beers’ projects in supporting economic development varies from country to country, depending on the nature of its operations and the structure of each country’s economy.
By way of example, De Beers points out that, in Botswana and Namibia, diamond mining contributes about 30% and 4% respectively, to the countries’ gross domestic product.
The company adds that mining projects require large-scale and long-term capital investment and, as a result, they attract significant investment to host countries. This results in direct economic and fiscal benefits, including infrastructure development, the provision of local healthcare and education, direct employment and payment of taxes and royalties. Indirect benefits include the development of a supply chain to support mining operations, skills transfer and development, indirect employment and community support.
De Beers was founded in South Africa in 1888. During 2012, the company stated it aimed to secure its long-term future in the country by approving the project to convert its flagship Venetia diamond mine from an openpit operation to an underground mine. The project was approved in early 2013, launched in October and, with a capital investment of $2-billion, it will extend the life-of-mine by at least 21 years to beyond 2040 delivering about 96-million carats with about 130-million tonnes mined.