Fizz goes out of De Beers, now infused with Canadian flavour
Company has merged its SA and Canadian assets into a single business unit, marking the end of SA’s leadership
It’s telling that De Beers has merged its SA and Canadian assets into a single business unit. Both countries are single-mine countries despite De Beers’ best efforts to grow its Canadian footprint in what proved to be a costly mistake at Snap Lake and the short-lived Victor mines.
The geographies could hardly be more diverse for the new MD of the merged entities, Nompumelelo Zikalala, who has cut her teeth over the past 18 years at the shrinking asset base in SA. The last remaining mine in Canada, the Gahcho Kue mine is on the edge of the Arctic Circle and operates in the most hostile environmental conditions imaginable for half the year, while in SA the Venetia mine in Limpopo province bakes in blue-sky heat for the bulk of its year.
For SA, to be bundled together with Canada is a rather ignominious end to what has been a major business unit in De Beers, the world’s largest source of diamonds by value. SA was home to the formation of the company 131 years ago and De Beers dominated SA diamond production since.
SA, and by extension De Beers in SA, was once the leading source of diamonds, but it was overtaken by then-Zaire (now the Democratic Republic of Congo), Russia and Botswana. SA’s peak diamond production has passed unless De Beers, which has restarted an exploration programme in SA after a two-year hiatus, finds something special.
According to statistics from the department of mineral resources, SA’s diamond output peaked at 15.78 million carats in 2005. At 10.5 million carats in 2018, SA is back to levels last seen nearly two decades ago.
In Canada, De Beers has the opportunity to build the Chidliak deposit, while in SA it is completing the $2bn Venetia underground project, but there is little else in either country to give them the critical mass to be standalone businesses.