Business Maverick

RARE EVENT

De Beers records first production from new South African underground mine

De Beers records first production from new South African underground mine
The De Beers Venetia underground mine shaft, Limpopo, South Africa. (Photo: De Beers)

An extremely rare, almost seismic, event just occurred in the SA mining industry – the first production has been delivered from a new mine built by an old company.

The mine in question is De Beers’ Venetia operation in Limpopo, which was formerly open pit but has been transformed into an underground facility. 

Open pit operations at Venetia ceased in December 2022 after more than 30 years of production. Construction of the underground section – at a cost of $2.2-billion, the biggest investment in South Africa’s diamond sector in decades – began in 2012. It is now 70% complete and has recorded its first production.

“The highly mechanised underground operation will deliver up to seven million tonnes of kimberlite ore per year, to produce between 4.5 million and 5.5 million carats of diamonds annually,” De Beers, a unit of Anglo American, said in a statement. 

The mine is expected to operate until at least 2046 and employs 4,300 people, making it an economic lifeline for its host communities, the Musina and Blouberg municipalities.

This, it must be said, is an extremely rare, almost seismic, event for the South African mining industry – the first production being delivered from a new mine built by an old company.

Investment and consequently production in South Africa’s mining industry have been declining for decades in the face of ill-conceived regulations, policy uncertainty, labour and social unrest, and all the challenges of a failing state – rampant crime, power shortages and a collapsing rail network.

South Africa last accounted for more than 5% of global exploration spend in 2004, the year the Mineral and Petroleum Resources Development Act came into effect, giving rise to the original Mining Charter with BEE and other targets that are onerous from an investment perspective.

De Beers delivers first production from underground operations at its world-class Venetia mine in South Africa. (Photo: De Beers)

Read more in Daily Maverick: Mantashe’s missed mining target — SA at less than 1% of global exploration spend

South Africa now accounts for less than 1% of global exploration spend, a consequence of, among many other factors, the failure of the Department of Minerals and Energy (DMRE) to replace its useless Samrad system for processing mining rights applications with a functional mining cadastre.

Read more in Daily Maverick: Explainer: A mining cadastre and public transparency

There is a tender process now under way and the winning bidder is supposed to be announced this month, which has only a few days left. Without meaningful exploration, South Africa’s mining sector can hardly sustain long-term production. And indeed, Stats SA data highlights the fact that output has been falling for years.

It’s also important to note how costly the DMRE’s dithering has been in terms of lost time. Mining is a long game, a point underscored by De Beers’ announcement this week. 

Construction of the underground mine at Venetia began in 2012, more than a decade ago, and is still only 70% complete. Once an ore body is discovered, it can take two decades or more before anything is extracted from it for commercial production.

Don’t expect any maiden production from another new South African mine anytime soon. DM

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Comments - Please in order to comment.

  • Wendy Dewberry says:

    Wow – two articles in one.

    The first thread reports that that a LOT of diamonds are to be extracted by this new phase of the De Beer mine and I wondered about this disclosure when the concept of scarcity has structured and maintained the price of diamonds?

    In the second thread about how terrible the ANC has been and will continue to be in tbe mining sector, it certianly brings home how the potential for job creation and economic upliftment of the rand has been squandered. I imagine that the zama- zamas have merely filled the space that Mantashe fails because he appears to be too busy trying to pick at the low- hanging fruit of fracking and open cast mining.

  • Robert Pegg says:

    It shows that government policies have affected investment in not only the mining sector but other industries. Why would any Intenational company want to invest in South Africa when there are many more attractive options out there that are not prescriptive ?

  • William Stucke says:

    It’s worth noting that Venetia is De Beers last operating mine in South Africa. The 2 that I had a hand in automating their underground operations in, Finsch and Premier, have both now been sold to Petra Diamonds Pty Ltd.

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