De Beers promises plan to accelerate diamond sector improvements

21st January 2016 By: Martin Creamer - Creamer Media Editor

De Beers promises plan to accelerate diamond sector improvements

Philippe Mellier

JOHANNESBURG (miningweekly.com) – Diamond mining company De Beers this week promised a comprehensive plan to accelerate 2016’s discernable diamond-sector improvements.

Addressing a sightholder reception in Botswana during the first De Beers sight of the year, De Beers Group CEO Philippe Mellier committed the world’s single largest rough diamond purveyor to the creation of multifunctional teams to boost responsiveness and undertook to enhance the company’s ability to identify value-adds to its sightholders – companies that are authorised to make bulk purchases of rough diamonds.

“We will put in place a comprehensive plan to support and accelerate the improvements we are starting to see in the diamond sector. We will create new, multifunctional teams so that agility and responsiveness is further hardwired into our activities,” the head of the Anglo American-controlled diamond-mining company pledged in Gaborone, where he denounced 2015 as a year in which “it felt as though the fates conspired against us”.

“There were several persistent headwinds and many unforeseen challenges. Each time it looked as though there might be the opportunity for an improvement, another unexpected problem raised its head,” Mellier lamented.

He said that more work needed to be done before full details of the new comprehensive plan could be provided but he was already excited about the potential benefits that enhanced agility could bring to both De Beers and its customers.

He urged concrete action to stimulate demand and outlined how continued investment in non-proprietary marketing would be a central part of the company’s 2016 plan.

“If we trust the sector’s positive fundamentals, then we can usher in a bright new dawn for the world of diamonds. Let’s look to the future and make 2016 the year that the diamond industry truly regains its sparkle,” he urged, adding that the company had embraced unprecedented supply flexibility and reduced production.

The 20 000-employee, 128-year-old De Beers, with mining operations in Botswana, South Africa, Canada and Namibia, last year put its Snap Lake diamond mine in Canada on care and maintenance, did the same with Debswana’s Damtshaa mine from the start of this year and has disposed of its Kimberley Mines to Epaka Mining and Petra Diamonds.

As a result of the diamond industry’s abnormally high pipeline inventories of polished diamonds and resulting lower demand for rough diamonds, Debswana had revised down its production for 2016 to 20-million carats from 24-million carats before, to match expected levels of demand for rough - more of which will arise from Botswana’s high-value, low-cost Jwaneng mine and less from Botswana’s grouping of Orapa, Letlhakane and Damtshaa mines.

The financially and environmentally troubled Snap Lake, De Beers’ first mine to come into production outside of Africa, never turned a profit in its seven years of existence.

Damtshaa’s closure will result in the Orapa Mine Plant 1 in Botswana operating at a reduced level of production.

There has also been turbulence on the synthetic diamond front with De Beers synthetic diamond materials company Element Six this month launching legal action against Singapore synthetic diamonds producer IIa Technologies, on alleged patent infringement.