Bloomberg News

De Beers Studies Voorspoed Mine Expansion as Diamond Prices Gain

June 10, 2011

June 10 (Bloomberg) -- De Beers, the world’s largest diamond producer, is considering an expansion of its South African Voorspoed mine to extend the life of the operation by as much as eight years as prices for the gems climb.

De Beers will complete a study this year on a proposed expansion that would prolong the mine’s life to “2026 or 2028,” rather than 2020 as currently planned, Mine Manager Mpumi Zikalala said today in an interview at the site near Kroonstad. It’s too early to estimate the cost of the project, which may include an underground section, she said.

De Beers plans to boost output to benefit from prices that jumped 21 percent last quarter after two straight annual gains of more than 30 percent, according to WWW International Diamond Consultants Ltd. Among the company’s Southern African projects, Voorspoed is one of the smallest and produces the highest-value diamonds including pink gems, which fetch a premium. The mine reopened in 2008 at a cost of 1.3 billion rand ($190 million).

Voorspoed produced 732,000 carats of De Beers’ total South African output of 7.56 million carats last year. The project will probably yield “just under 700,000 carats” this year as workers mine areas with lower concentrates of diamonds, Zikalala said, adding that output may approach 800,000 carats in 2012.

De Beers, producer of about 40 percent of the world’s rough diamonds, posted 2010 net income of $546 million, compared with a year-earlier loss $743 million. There’ll probably be a global shortfall of the gems for the next five years, Chairman Nicky Oppenheimer said yesterday in a speech in Washington.

The Oppenheimer family owns 40 percent of the Johannesburg- based company. London-based Anglo American Plc has 45 percent and Botswana holds 15 percent.

--Editors: Amanda Jordan, Alastair Reed

To contact the reporter on this story: Carli Lourens in Johannesburg at clourens@bloomberg.net

To contact the editor responsible for this story: Amanda Jordan at ajordan11@bloomberg.net


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