Home South African News De Beers to close Free State mine

De Beers to close Free State mine

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The Voorspoed Mine will be closed as the diamond giant fails to obtain a suitable operator.

An employee looks across the open pit of the Voorspoed diamond mine, operated by De Beers in Kroonstad. Photo: Bloomberg

JOHANNESBURG – Diamond producer De Beers Consolidated Mines (DBCM) yesterday said it had decided to close its Voorspoed Mine in the Free State after it failed to find a suitable bidder.

The group said the decision followed an extensive, transparent and comprehensive disposal process, which involved a rigorous due diligence exercise by the bidders to acquire the mine. It said it was unsuccessful in identifying a suitable operator that met the specified criteria.

Chief executive Phillip Barton said none of the four bidders that were interested in the mine met the criteria. “We widened our search far and wide, but we had put emphasis on the local investors,” Barton said. “Unfortunately, none of the bidders met our criteria.”

De Beers put Voorspoed up for sale in November, saying it was looking for investors that have the experience and technical skills to operate the mine, good standing in the market, the ability to invest, and strong black economic empowerment credentials.

The group said it would consult employees, unions, host communities and the Department of Mineral Resources (DMR) in a transparent and responsible manner, while continuing to uphold the highest safety standards at the mine until its closure at the end of the year. Voorspoed employs 386 people and 1000 contractors. The mine produces 700000 carats a year.

Barton said the group wanted a potential investor that shared its values and had the required technical and financial capability.

“Unfortunately, we have not been able to identify a bidder that met the necessary criteria, and so we have reluctantly taken the decision to close the operation in a responsible manner, as it is no longer economically viable for DBCM to operate the mine,” he said.

Voorspoed was opened in November 2008, and the company said the expected operating life of the mine was about 10 years.

De Beers said it had engaged the DMR on potential job losses in the mining sector and mines being placed on care and maintenance.

It said the department requested that the closure be conducted alongside a separate process of identifying and proposing an operator capable of purchasing Voorspoed Mine.

“De Beers confirms that it is principally not opposed to the DMR’s request of embarking on a process to identify a proposed operator within a 30-day period commencing on August 1 and ending on August 31,” the group said.

“We look forward to engaging with the DMR further in relation to this proposal in order to understand and finalise the basis upon which it will be undertaken,” DBCM said.

Meanwhile, Anglo American yesterday announced that the value of rough diamond sales for De Beers’ sixth sales cycle of 2018 amounted to $530million (R6.98billion), down from $576m compared with the cycle six sales of 2017.

The group said cycle six 2018 provisional sales value represents sales at July 30.

The cycle six amount was slightly less than the $581m recorded at the end of cycle five.

Group chief executive Bruce Cleaver said: “In the sixth sales cycle of the year, demand for De Beers rough diamonds was in line with expectations during the seasonally quieter summer period for the industry’s midstream sector.”

– BUSINESS REPORT