Plenty more gems in the pipeline but reserves are dwindling
By 2020, many of the existing mines will begin to see declining outputs
KIMBERLITE ore was discovered in South Africa in the late 1800s and in the following decades the country became the world’s leading producer of diamonds, supplanting India.
Kimberley became the diamond mining centre and the discovery prompted exploration in countries such as Canada, Russia and Botswana, which today are the world’s main diamond producers.
Botswana is the second-largest producer in the world after Russia, with about 21% of global rough diamond production by value.
De Beers, the world’s largest diamond company, this week opened its biggest diamond mine in 13 years outside sub-Saharan Africa. The Gahcho Kué mine in Canada is said to be able to produce about 54 million carats over the next 13 years.
Are the prospects of discovering more diamonds in South Africa dead, and how many more years of diamond reserves does Botswana have before Canada or other undiscovered areas take over from the No 2 producer?
BP Bernstein analyst Makwe Masilela said that although there were some exploration projects in South Africa by Cullinan Diamonds and Petra Diamonds, once an area’s resources had been depleted, the show must move on. There is little to be found in Kimberley, but other areas of South Africa might be better prospects.
Botswana’s Debswana, 15% stateowned and 85% owned by De Beers, last year produced 20.3 million carats (out of a De Beers Group total of 28.6 million carats). In 2014, Debswana produced 24.2 million carats (out of a De Beers total of 32.6 million) and in 2013, 22.7 million carats (out of a De Beers total of 31.1 million).
The diamond industry contributes about 25% to Botswana’s GDP.
De Beers, which this year sold its Kimberley diamond mines to Ekapa, a consortium that includes Petra Diamonds, said that under its new owners the Kimberley operations could continue longer, providing jobs that had been historically lost. De Beers halted production at parts of Orapa mine in Botswana.
Otherwise, in Botswana, De Beers and Debswana are expanding Cut 8, which will become the main source of ore for the Jwaneng mine. One of the world’s richest diamond mines by value, it will be extended to at least 2035. “The new mine will provide access to an estimated 93 million carats of mainly high-quality diamonds,” said De Beers Group spokesman Tom Tweedy.
In South Africa, De Beers is constructing the R27-billion Venetia underground mine in Limpopo. It is scheduled to begin production in 2022, and is estimated to produce 94 million carats into the 2040s.
De Beers has invested $140-million (about R1.9-billion) in a new, deepwater diamond exploration and sampling vessel, SS Nujoma, that will be deployed in Namibian waters in 2017. Tweedy said it was the most technologically advanced marine diamond vessel in the world.
Petra Diamonds is embarking on an exploration project, Reivilo, about 110km from its Finsch mine, northwest of Kimberley.
“This is a project known to have diamondiferous [diamond-containing] kimberlites and we are re-evaluating these kimberlites to see if they do have economic potential,” Petra Diamonds spokeswoman Cathy Malins said. “We are keeping this work fairly low-key and lowcost, however, as production is our main focus.”
Tweedy said growth in demand was expected to continue in the US and would be boosted by the growing middle class in China and India.
“By 2020, when many of the existing mines will begin to see declining outputs, overall supply will likely plateau and, unless major new discoveries of large mines are made in the coming years, supply can be expected to decline gradually from 2020,” he said.