De Beers merges South African and Canadian mines to turn to profitability

SOUTH AFRICA – De Beers Group, the Anglo-American diamond mining company has merged its South African and Canadian mining firms in order to turn its business to profitability.

The merged business called De Beers group, will be led by Nompumelelo Zikalala, who has 18-years’ experience in diamond mining.

De Beers, which is 85% owned by Anglo American, has closed and sold mines in SA and Canada in recent years as the assets reached the end of their lives or remained stubbornly unprofitable.

In 2007, London-listed Petra Diamonds acquired Cullinan Diamond Mine from De Beers Consolidated Mines, the South African arm of diamond giant De Beers for a cash consideration of R1billion (US$72 million).

Petra Diamonds has since been a major beneficiary of De Beers’ mine sales in SA.

Last year, De Beers said it had decided to close its Voorspoed Mine in the Free State after it failed to find a suitable bidder.

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

With the closure of Voorspoed Mine, De Beers will have just one mine in SA, the Venetia mine, which is in a US$2bn project to move to underground mining from opencast operations.

The company has been struggling with small asset base in both South Africa and Canada making it hard to operate the business on a profitable scale.

In Canada, De Beers has closed and flooded its unprofitable Snap Lake mine and will close its depleted Victor mine by the middle of 2019.

The new entity will manage all the company operations, including De Beers marine, which operates ships sucking diamonds off the ocean floor on the coast of Namibia with Zikalala as its managing director.

Zikalala was promoted from her role as deputy CEO of the South Africa business.

Phillip Barton, a 30-year veteran of De Beers and the CEO of De Beers consolidated mines, the SA business, will leave, as will Kim Truter, who heads up the Canadian business, which has the shared Gahcho Kué mine as its main asset.

“The new business will streamline operational management and identify synergies to create a more sustainable business in the two countries,” said De Beers CEO Bruce Cleaver.

“Our businesses in these countries face very different challenges and require a leader of Mpumi’s skill, vision and experience to maximise their full potential.”

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