Diamonds are getting harder to find.
De Beers, one of the world’s largest mining companies, is digging deeper to find more diamonds in South Africa with a new $2 billion mine under construction beneath its existing Venetia mine in Limpopo, near the border with Zimbabwe and Botswana, MiningGlobal reported.
It’s a gamble.
As diamonds get harder to find in open pits near the Earth’s surface, mining companies must dig deeper and spend more money to find the precious stone and symbol of love, according to AFP.
Diamond prices have fluctuated enormously over the last eight years, prompting De Beers to close two mines in Canada and Botswana in 2015.
After the global economic crisis in 2008, diamond prices recovered quickly to hit a peak in 2011 before falling about 20 percent to slightly below their current rate, AFP reported.
Global demand for diamond jewelry grew 2 percent in 2015 with strongest growth in the U.S. and China, De Beers reported in April.
In this environment, mining companies must judge whether it is profitable to prospect for diamonds in increasingly difficult geological conditions, or in unstable countries such as Angola and the Democratic Republic of Congo, MiningGlobal reported.
“It takes time to get a new diamond mine started — perhaps 10 years. That is what makes the $2 billion expenditure at the Venetia mine so significant,” said New York-based industry analyst Paul Zimnisky.
Being converted from an open pit mine to an underground mine 1,000 meters (3280 feet) beneath the surface, the Venetia mine is predicted to become one of the world’s five biggest diamond mines when it’s completed in 2022, MiningGlobal reported.
It’s a gamble that could pay off substantially for De Beers, according to Ludwig Von Maltitz, De Beers Venetia general manager.
“Worldwide, the easier diamond sources have probably been found, but with this resource here, we hope we have something we can extend well into the future,” he said.
De Beers’ $2 billion US cash injection to convert Venetia from a surface operation to an underground mine is the company’s largest investment ever made in South Africa, MiningReview reported.
It’s expected to extend the mine’s lifespan for at least 20 more years. The project also involves shaft-sinking innovation that has been used internationally but not in South Africa until now.
The Venetia Underground Project officially began in July 2013 but preparation work began a decade earlier.
The decline tunnel development began in 2014 and to date is just over 1 kilometer (0.62 miles) in length, according to MiningReview. Once completed, “it will extend to the bottom of the ore body and total 7 kilometers (4.3 miles) in distance,” said Christoff Kuhn, Venetia Underground Project head.
Venetia is South Africa’s largest diamond producer, MiningReview reported.
De Beers’ optimism is not matched by others in the industry, according to MiningGlobal.
Peter Major, a mining specialist at Cadiz Solutions in Johannesburg, describes De Beers’ new project is “stupendous.”
“We are often told that the growing world population, combined with the increasing difficulty of finding diamonds, will mean prices will always rise, but we will see,” he said. “The project at Venetia is stupendous, especially as very few other firms are investing in South Africa.”
By 2021 the diamond-bearing ore at Venetia’s open pits will be depleted, MiningReview reported. The new underground mine, based on current reserves and resources, is expected to continue operating until 2043, producing an estimated 96 million carats over its 22 year lifespan.
Despite uncertainty in the market, Venetia is expected to operate until at least 2043 and some believe it could be operate even longer, according to MiningGlobal. “If we can do it well enough, I can’t see why mining should not be a lucrative business going forward,” Maltitz said.
A project of this size and value is not only a major achievement for De Beers but also for South Africa, MiningReview reported. It will secure the country’s position as owner of one of the world’s largest diamond mines.
