Oranjemund Online

Johannesburg - De Beers MD Gareth Penny has refused to specify the amount by which the firm will cut production this year, but market speculation is that the group's 2009 diamond output could be 35% to 40% down.

That would drop production to about 29m carats from the 48.1m carats the group has reported for 2008.

The speculation is backed up by the fact that all the mines owned by Debswana, the 50/50 joint venture between De Beers and the Botswana government which controls the group's main producing mines in Botswana, are currently on care and maintenance

In reply to a question posed during the Anglo American results presentation in London, Penny said production would be "significantly reduced" but that the actual extent was still "work in progress".

Diamond mining industry sources had indicated De Beers has already taken drastic action in Botswana and South Africa to chop production, with output at the huge Jwaneng and Orapa mines halted as well as at the Venetia mine in South Africa.

A Debswana spokesperson confirmed that all Debswana mines are on care and maintenance until further notice.

The spokesperson said: "Debswana is currently in consultation with various key stakeholders about mitigation actions resulting from the global downturn and the necessity to reduce production during 2009 to align with demand, conserve cash, protect employment and maintain readiness for an eventual upturn in the market. Once all these consultations have been concluded, the media will be informed accordingly."

De Beers spokesperson Tom Tweedy said the firm was not prepared to respond to production queries on a mine by mine basis.

The De Beers results for 2008 were published on Friday, as part of the overall annual results presentation from Anglo American. That is a sharp break from the previous tradition, in which De Beers always presented its numbers individually ahead of the Anglo presentation.

Tweedy said the change had been made at Anglo's request, given that it is the largest shareholder with a 45% stake.

The results showed De Beers is in a dire financial situation - but just how dire only emerged in response to questions from analysts.

Interest-free loan

The results statement noted that the three De Beers shareholders - Anglo American, the Oppenheimer family and the Botswana government - had agreed to provide $500m in loans to the company in 2009 in proportion to their shareholdings.

It only emerged through follow-up questions that the shareholders had already put up $300m in loans during 2008 and that the latest $500m loan would be interest-free for two years, after which it would revert to market pricing,

"If the shareholders are prepared to provide interest-free loans, you have to wonder why they did not simply put in more equity funding. The answer could well be that one of the three shareholders may not have been prepared to commit more equity to the business.

"The other point to consider is that perhaps De Beers' financial situation is so bad that it cannot afford to pay any interest on the extra loans, given that it already has net interest-bearing debt amounting to $3.6bn," said an industry source.

Penny said: "We have taken steps to significantly reduce production levels, costs and capital expenditure across all operations. These actions, together with the business restructuring initiatives already completed, have positioned De Beers to weather this tough economic environment."

Last year's production of 48.1m carats was 6% down on the 2007 production level of 51.1m carats. The main drop came from South Africa, where production fell to 12m carats (2007 - 15m carats) mainly as a result of the sale of the Cullinan mine and the closure of the Oaks mine.

Production from Debswana was marginally down at 32.3m carats (33.6m carats) while the only growth came from Canada, where the newly-opened Victor and Snap Lake mines produced 1.6m carats (81 000 carats).

Rough diamond sales for 2008 were virtually unchanged at $6.9bn ($6.8bn), but that will be altered dramatically this year.

RBC Capital Markets analyst Des Kilalea said: "Rough diamond sales are likely to be 40% to 50% down in the first half of the year. There may be some recovery in the second half, but sales of $3.5bn to $4bn look a reasonable target for the full year."

"TORONTO (miningweekly.com) – Diamond-miner De Beers Canada will lay off 128 employees and 90 contractors at its Snap Lake mine, in Canada's Northwest Territories, as it slows production to meet weakened demand for rough diamonds, the firm said on Tuesday.

The company has already reduced production at Snap Lake, as well as the Victor mine, in Ontario, and reduced capital spending at the operations.

However, the measures taken in 2008 "are no longer enough to keep ahead with the current condition of the market", said senior vice-president for operations Chantal Laoie.

The two Canadian mines were De Beers' first operations outside the Southern Hemisphere.

"This is a very difficult, but necessary business decision, as we respond to the changing client demand for diamonds in the short term," De Beers Canada president and CEO Jim Gowans said in a statement.

De Beers announced in January that it plans to cut as many as 1 415 positions across the group, and Debswana, which is a joint venture between the diamond giant and the government of Botswana, said on Monday it would halt all operations until at least April 14, to conserve cash and try align supply with slowing demand."

De Beers back to its old tricks
Feb 27 2009 16:10


Johannesburg - So much for the "new" De Beers with its more open and transparent way of doing business. When push turned to shove, the current management showed itself to be true descendants of the old cartel.

I am referring to the devious way in which the group handled the release of its financial results for 2008 and, in particular, the manner in which management did its best to minimise publicity on production cutbacks at the De Beers mines.

Despite being delisted, De Beers has traditionally published its results separately from those of parent Anglo American.

This year the De Beers results were put out as part of the overall Anglo American presentation on February 20. The official reason is that Anglo requested it to be done this way because it is the major shareholder.

The real reason? That's straight out of the doctrines of one Niccolò Machiavelli and his advice to the Medici family, which ran the Italian city state of Florence in the 16th century.

In his famous work The Prince, Machiavelli held that if there was a lot of dirty work to be done, it should be executed all at the same time to avoid drawing out any lingering negative reaction from the victims' relatives and allies.

So, if you have a ton of bad news to deliver, combine it and swamp the news services. Who would be concerned about what's going on at De Beers after Anglo has passed its dividend?

Then there was the refusal by De Beers MD Gareth Penny to elaborate on production cutbacks on the group's mines.

Diamonds and Debswana

The official comment in the documentation was that "De Beers has taken steps to significantly reduce production levels, costs and capital expenditure across all operations".

Asked to be more specific at question time during the Anglo results conference, Penny replied he could not because this was still "work in progress".

But phoning around that afternoon produced a statement from Debswana that all its mines had been placed on care and maintenance until further notice.

That was a huge piece of news because Debswana accounts for about 67% of De Beers' total diamond production. In 2008 this amounted to 48.1 million carats, of which 32.3 million carats came from the Botswana mines.

According to De Beers, the reason for Penny's reticence was that due process had not been completed with the unions and employees in Botswana.

"One cannot have employees read about their future before the agreements and understandings about mitigation steps, and the actual process involved in reducing costs, have been fully discussed by the directly affected parties," said a De Beers spokesperson this week.

So the final nuts and bolts with the Botswanans were put in place in the two hours following the Anglo presentation?

An alternative suggestion from a diamond industry source was to ponder whether the Botswana government - a 50-50 joint venture partner with De Beers in Debswana - had a different agenda and decided to be more forthcoming than Penny for its own reasons.

Getting information about the situation on De Beers' South African mines turned out to be as hard as pulling teeth.

The first reaction from the De Beers spokesperson was a refusal to provide information on a "mine-by-mine basis". That was in response to a query whether Venetia - the largest De Beers producer in SA - had been shut down along with the Debswana mines.

Then came a follow-up email to clarify the situation, which stated:

Forever Precious at the Oscars

"De Beers Consolidated Mines is operating all six mines in South Africa on mine plans appropriate to the demand for new production. This level might change in the course of this year and this possibility has been included in our planning."

The general opinion in the diamond market is that there's very little demand for new production" at the moment, so I published an article containing the speculation that Venetia had been shut down.

All of a sudden De Beers WAS prepared to provide information on specific mines. Miningmx received an immediate denial that Venetia had been closed and an accompanying statement which said:

"Venetia has not ceased production. Production continues on all De Beers mines in South Africa, and Venetia continues as our largest mine with three shifts operating five days a week mining and treating ore and recovering diamonds."

So why could they not have said that in the first place? Does it have something to do with the fact that the Botswana government might not be too happy that its mines have been shut down but the SA mines remain in production?

Finally, neither the statement about Debswana nor a subsequent one about retrenchments at the Snap Lake mine in Canada had been placed on the De Beers group website as of midday, February 26.

They went up that afternoon, shortly after queries were emailed to the De Beers spokesperson asking about Penny's response and why the announcements were not on the website.

Up until that time, anyone visiting the site could have been forgiven for thinking all was just fine in the diamond business while reading about the Forever Precious mark collection and diamonds at the Oscars.

TORONTO (miningweekly.com) – Diamond giant De Beers is running its Snap Lake diamond mine, in Canada's Northwest Territories, at around 30% to 40% of design capacity, De Beers Canada CEO Jim Gowans said on Tuesday.

A second operation, Victor, in Ontario, is operating just below 100%, at some 90%, he said, in an interview on the sidelines of an event hosted by MineAfrica.

The first six months of the year will be "a challenge", as the financial crisis and slowing economic activity results in depressed sales for the precious gems, Gowans said.

The De Beers group has announced production cutbacks and job cuts at its operations around the world, and said last week that it would lay off 128 employees and cut 90 contractor positions at Snap Lake, as part of the restructuring.

In Botswana, the world's biggest producer of diamonds, the Debswana joint venture between De Beers and the government has announced a temporary production halt across all mines, until at least mid-April, while the group's South African mines are also running below capacity.

Despite the changing market conditions, there has not been a lot of movement in diamond prices, Gowans said.

"It's just that people stop buying; if there is uncertainty in the market, they sit on their money," he added.

De Beers Canada, like the rest of the group, is trying to match production to sales levels, and will continue to change output levels as conditions shift, particularly at Snap Lake.

"It's basically been changing every week, as we monitor the industry and the sights."

The high margins at Victor will mean that cash-flow from the mine is better protected than at lower-grade mines.

The Snap Lake and Victor operations, which De Beers officially opened in July 2008, are the group's first producing mines outside the Southern Hemisphere.

According to the mine plans, Snap Lake is expected to produce 1,4-million carats a year for 20 years, and Victor is expected to deliver 600 000 ct for a life-of-mine of 12 years

Johannesburg - Diamond producer Trans Hex has ended negotiations over the acquisition of De Beers' Namaqualand division, citing "current uncertain global economic and industry conditions".

The company started negotiations with De Beers in September 2008, but the diamond market has undergone a severe contraction since then as the demand for rough gems collapsed because of the global financial crisis.

This has resulted in De Beers shutting down its Botswana mines until May 2009, and making unspecified production cuts on its South African mines.

The Trans Hex share price - already under pressure because of difficult operating conditions at its Angolan mines - has set a series of new lows, dropping from 380c in November to 150c.

According to a diamond industry source a key issue in the negotiations concerned the environmental liability at the Namaqualand division, which has carried out extensive surface mining since the 1920s.

De Beers had previously disposed of its Koffiefontein and Cullinan mines to Petra Diamonds through deals in which Petra took over the environmental liabilities at these operations.

The source said: "The environmental liability at Namaqualand is enormous, and estimated at around four times the value that Trans Hex actually put on the business."

Trans Hex company secretary George Zacharias said: "The environmental liability was one of the major negotiating points, but the main problem was the uncertainty created by the economic climate which made it impossible to agree on issues fundamental to the valuation of the transaction."

De Beers spokesperson Tom Tweedy said: "The environmental liability at Namaqualand was a factor in the negotiations, but it was not a deal breaker because there was an understanding between the parties on the rehabilitation issues."

Production has been cut back at the Namaqualand division, but Tweedy refused to provide specific numbers for current output. The division has produced up to 300 000 carats annually in the past.

Tweedy said employment levels at the Namaqualand division had dropped steadily over the past four years from about 2 000 to the current level of about 550 mineworkers. "

here's a few of the replies.....

"JapieDownUnder
Mar 06 2009 02:11

And people still think De Beers is committed to SA? Wake up people - De Beers aways talks the talk but they are disinvesting as quickly as they can. They should have made provision for rehabilitating the coastline of the West Coast many years ago but the initial estimated costs were staggering so it was quietly swept under the carpet. I am really not surprised they tried to offload the responsibility onto some other poor unknowing operator - typical De Beers MO.

Peter
Mar 05 2009 21:00

The rehabilitation of the mining area in Namaqualand will never happen. 80 years of mining (@ 300 000 carats p.a.) and their pockets are filled but they don`t have funds for the rehab... Of the 550 remaining workers, another 300 received notice that their services won`t be needed longer. Out of a class of 28 only 3 children returned at the begining of the year. De Beers exploited Namaqualand and now they run away taking every last cent with them, hoping a tsunami will do the rehabilitation."

Most upsetting Mike especially to De Beers' cheerleaders and apologists. When they going to wake up to the stark realities of the mining business. De Beers is not a benevolent society. They will be the first to admit this.
Best regards
Gordon

There were early indications of some diamond dealers in Antwerp buying up good quality diamonds cheaply and holding them as a store of value in preference to gold, Trans Hex company secretary George Zacharias told Mining Weekly Online on Thursday.

"We think that, as soon as confidence returns, the diamond market will probably turn fairly quickly," Zacharias said, following the lifting of a cautionary signalling the end of the JSE-listed company's lengthy discussions on the possible acquisition of De Beers' Namaqualand Mines.

"Some say it's going to take three years for the market to turn and others in Antwerp say that there are already indications that the diamond market for good quality stones is turning.

"People who are experts in the industry and who know diamonds, those in Antwerp, see diamonds as a tremendous store of value, and better than holding gold," he said.

Until recently, there was insufficient confidence, but confidence appeared to be returning at certain levels of the business.

"There are early indications of people coming back into the market, diamond players who know diamonds well and instead of buying them like they normally would and sending them for polishing immediately, they are now buying them and holding them, because diamonds are cheap now. In some instances they are 50% cheaper than they were six months ago," he said.

On the ending of the Trans Hex-De Beers negotiations on the purchase of Namaqualand, Zacharias said that, had current diamond prices been at mid-2008 levels, it would have changed the situation fundamentally and the deal might have gone through.

But the risk factors had increased to an extent that made it difficult to agree terms, "but we have no doubt that the long-term demand for Trans Hex's diamonds will be very strong because of the extent of the cutback", Zacharias added.

Downturn, debt dull diamond sector sparkle


It wouldn't be fitting to mount a barrage of "sale" and "special offer" signs in the windows of jewellers crowded into Antwerp's diamond square mile. But traders, cutters and retailers say business is terrible.

Just a handful of diamonds can be worth a fortune, so the diamond industry -- centred since the 16th century on the Belgian port city of Antwerp -- has for years depended on debt. Now plunging demand, falling prices and lender reticence have left it looking uncomfortably overdrawn.

The global industry's debt, which peaked at $14-billion to $15-billion in mid-2008 according to banks and industry groups, plays a crucial role in financing about $50-billion to $60-billion of trade in cut and rough stones.

"It's one big holiday ... There's just no appetite to buy," said broker Joseph in the well-policed core of Antwerp's diamond district, a multicultural hive with a large core of Jewish and Indian merchants.

He said trade was about one-tenth of usual levels.

Producers De Beers, Russia's Alrosa, Rio Tinto, BHP Billiton and Harry Winston Diamond have come together to discuss plans for an unprecedented joint marketing effort.

De Beers used to foot the bill for generic advertising: "A Diamond is Forever" was its most memorable slogan. "Fewer, better things" is, tellingly, the message for this downturn.

Some experts and insiders predict company failures and a major industry shake-up, that could force greater transparency and might draw in outside investors.

"Some players may not be around. Some big players may not be as strong. The market will be smaller and debt will have to fall," said Victor van der Kwast, international diamond and jewelry group head at ABN AMRO, one of the main names in the business.

He said a 30% to 40% market contraction was possible.

So far only a couple of houses have failed, in Israel. In India, the centre of manufacturing, about half a million of some 800 000 workers have been laid off.

Antwerp, once home to 25 000 cutters but now to only 1 000, has escaped that level of pain. But the city which handles about 80% of all rough diamonds and more than half of all cut stones for an annual turnover of $43-billion, is exposed.

Other centres, notably Dubai, are seeking market share.

Debt 'red flag'
Israel-based diamond expert Martin Rapaport says top-end demand from the rich and super-rich, such as Russian oligarchs or Arab sheikhs, has dried up completely and only smaller gems for engagement rings are keeping the market alive.

The sector's debt is a "clear red flag", bearable with current low interest rates, but not if they creep high.

"It's wait and pray," he said, adding equity positions of diamond companies were "technically wiped out".

Whether or not that is the case diamond jewellery sales in the United States, which accounts for about 45% of the world market, fell by 20% in the traditionally strong Christmas season.

"Manhattan was horrible. It was supported by a lot of foreign buyers, but now that too has dried up," said Dilip Mehta, head of Rosy Blue, a diamond group with $1,7-billion in annual sales.

The collapse is amplified back along the chain, Mehta said, with demand for cut stones predicted to fall by as much as 30% and requirements for rough diamonds likely to drop by up to 60% in the year from October.

Even though some traders hope diamonds can acquire the lustre of gold as a relatively "safe" bet, consumers now need convincing to buy a diamond.

Cut and rough prices have fallen by about 15% and 50% respectively from mid-2008 peaks so anyone holding diamonds as prices collapsed would face problems.

"Nearly everyone with stock has lost as much as 30% to 50%. The big players have lost even more," said small trader David outside one of the about 1 800 diamond businesses in the area.

Many say business is at its worst at least since the early 1980s when a speculative bubble burst, prompting a wave of bankruptcies.

Andre Gumuchdjian, whose family has been in the diamond trade for over a century, said the sector itself faced greater problems in 1981-82, although the mood now was possibly as bad.

"The rest of our investments have fallen as well," said Gumuchdjian, who is president of the Belgian Polished Diamond Traders Association. "We are wondering what will happen."

Christian Van der Veken, sitting in his upmarket jewellery store, noted one key difference: interest rates in the early 1980s were above 10%. Where servicing debt was the main problem then, now the struggle is maintaining credit.

Banks battling with credit problems of their own have had to take a closer look at debt, particularly in view of reports that traders are selling at substantial losses.

"That's when they start hesitating," said Philip Claes, spokesperson for the Antwerp World Diamond Centre. "Everyone is cautious about business today. You have to ensure you get paid."

Follow gold?
Van der Kwast of ABN AMRO said banks had not aggressively lowered limits for clients, but added that it was in no bank's interest to finance losses for a customer.

The biggest firm in the industry, De Beers -- which sold about two-thirds of all rough diamonds at the turn of the century and handles about 40% now -- last month received a two-year $500-million interest-free loan from shareholders including mining group Anglo-American. The company did not respond to inquiries for this article.

But not all can access such funds.

Debt has tailed off and Rosy Blue's Mehta believes it will drop to some $10-billion with a smaller, leaner market.

However, Charles Wyndham, diamond consultant and founder of industry website Polished Prices, said turnover had fallen by much more than had the debt used to finance it, meaning the relative level of debt had risen.

Van der Kwast thinks the downturn may persuade institutional investors to put money into diamonds, and said some pension funds are looking at them as a possible safe haven.

And experts point out diamond prices have held up relatively well compared with most metals and stock markets.

Gumuchdjian also draws attention to the steady recovery of gold prices this year: "I think prices are more poised to go up than down. Diamond prices have always followed gold."

Wyndham argues a sector shake-up may clip the wings of some bigger players and force the sector to accept change, such as adopting clearer pricing.

"I hope for a huge increase in transparency ... If the industry is going to grow it needs to become transparent so as to attract outside funds," he said.

Van der Veken, who sells jewellery priced up to €100 000, believes the market has calmed since a calamitous final quarter of 2008. Optimists talk of a pick-up late this year. But many feel the recovery will not happen until 2010.

"Personally, I wouldn't be surprised if we are among the last to recover," said the AWDC's Claes.

MITFORD Mundell, General Manager of Namdeb, has told workers to remain positive and help the company survive the economic crisis.

In an internal staff memo leaked to The Namibian, Mundell wrote: "It is time for all of us to stand up to the 'rotten apples' – those that spread their negativeness [sic] amongst us, trying to pull the whole business down and consuming some of our positive energy."
He was referring to those who had criticised the various cost-saving options outlined during meetings with staff last week. Namdeb Managing Director Inge Zaamwani-Kamwi and members of Namdeb and De Beers management toured the mining area to discuss the effects of the global financial crisis on the industry.
It was during these sessions that the possibility of a three-month 'production holiday' was raised. The temporary production halt is expected to save the company up to N$200 million.
"Who are our enemies? During the engagement sessions there were people that openly attacked every initiative and good intention. A common thread from all these attacks is that it comes without any form of positive alternative initiative or suggestion. My question to you is: Why do we tolerate these negative people?" Mundell wrote, inviting feedback and suggestions on the issue.
When The Namibian contacted Mundell for comment on the content of the memo, questions were referred to Namdeb's Manager for Corporate Communications, Ndeshi Hangula-Shikwambi, who said that "the GM's comments in the internal brief were directed to people who were trying to instil negativity towards the company, and this is uncalled for in these trying times".
She said this was made clear to workers who had tried to disrupt the meetings.
Reminding workers of what had been discussed during Zaamwani-Kamwi's visit, Mundell wrote that the "extraordinary economic times" had resulted in reduced demand for diamonds, and hence reduced income for Namdeb, necessitating cost-cutting measures.
"We have been proactive by putting a fit-for-purpose organisational structure in place, reducing production and our labour complement by half, and cutting out wastage (non-value adding cost and activities), resulting in cost reductions of more than N$800 million from 2008 to 2009."
But despite the lashing that the economic crisis has inflicted on the diamond industry, Namdeb remains positive about the future.
"We still have world-class ore bodies, giving us more than enough reasons to stay excited about the potential, and therefore the future of our business," wrote Mundell.
"You should be excited about being part of a team that is facing the storm well prepared, with energy and determination."
He said management hoped to conclude the arrangements for the production holiday by the end of this week.
Hangula-Shikwambi told The Namibian that Namdeb has been successful in its cost-cutting measures so far, with over 500 applications for voluntary separation having been approved and no forced retrenchments.
She also said that Namdeb planned to cut production by 50 per cent, from two million carats in previous years to one million this year.

Not exactly Diamond News, but has relevance in the bigger scheme of things...

"London - Mining group Anglo American Plc has sent out a request for proposals to banks for a loan of about $2bn, three banking sources close to the deal said on Tuesday.

Negotiations are at an early stage, the bankers said.

The mining sector has been hard hit by the global credit crisis, which has seen demand and equity valuations fall. However, copper prices saw an improvement in March.

Banks are already exposed to Anglo American after the company tapped the European syndicated loan market last year for a $4.45bn loan expiring in 2011, Thomson Reuters LPC data showed.

Anglo American is rated "A" by Fitch and "Baa1" by Moody's."

TORONTO (miningweekly.com) – The world's biggest diamond-miner, De Beers, has begun to see "signs of improvement" in the market, and expects the trend to continue for the rest of this year.

Demand for rough diamonds fell sharply in the fourth quarter of 2008, as cutters, polishers and retailers responded to the financial crisis by conserving cash and reducing inventory levels, instead of buying new rough stones.

The diamond-mining industry reacted quickly to the drop in demand, curtailing production and, in some cases, halting mines altogether.

De Beers, in which diversified miner Anglo American (Anglo) owns a 45% stake, has announced production cutbacks in South Africa, Botswana and Canada, and has also said it will cut jobs to lower costs.

In Botswana, mines owned and operated by the Debswana joint venture between De Beers and the government were temporarily halted for 50 days in February, although maintenance work continued on the assets during the stoppage.

De Beers announced that Debswana's Jwaneng, Orapa and Letlhakane mines restarted operations on Wednesday, while the smaller Damtshaa mine, and the Orapa No 2 Plant, will remain suspended until the end of 2009.

The first quarter of the year was "a challenging time", De Beers Botswana chairperson Stephen Lussier said in a statement on Wednesday.

However, there are signs of improvement in the market and De Beers expects this to continue as the year unfolds, Lussier said.

"The economic downturn has impacted on all stages of the diamond pipeline, and as retailers have lowered their level of purchasing it has taken time for inventory to work through the pipeline leading to a disproportionately negative knock-on effect on production."

Earlier this month, Canadian diamond-miner and high-end jewellery retailer Harry Winston Diamonds said that it had begun to see some improvement in the pricing and demand for the diamonds produced at its Diavik mine, in Canada's Northwest Territories, that it owns with Rio Tinto.

The market may have reached a bottom, CEO Robert Gannicott said at the time.

In the long term, economic growth in emerging markets will likely ensure that demand outpaces what are expected to be lower levels of demand supply, Lussier said on Wednesday.

In February, Anglo revealed that it, together with two other De Beers shareholders, the Oppenheimer family and the Botswana government,  had extended a $500-million loan to the diamond-miner, to help it get through the difficult economic climate.

Read some of it in the papers .. lets hope  it continues a slow steady  upswing ... there  is  light at the end of the tunnel ...

Light at the end of the tunnel, From todays Namibian Paper...

"NAMDEB remains on track to end its production holiday on June 30 as diamond demand begins to show "encouraging" signs.

Daniel Kali of DeBeers says diamond demand has started to pick up slightly, though levels continue to remain significantly low.

"We are beginning to see some encouraging demand for some rough diamonds. However, demand still remains way below pre-crisis levels," he told The Namibian on Wednesday.
Following the onset of the financial crisis and poor trading conditions for the fourth quarter of 2008 and the first quarter of 2009, DeBeers had to undergo drastic cost-saving measures that included letting go of thousands of staff, reducing shifts, and cutting or halting production to meet demand levels.
Overall, DeBeers production almost came to a halt with a 90,8 per cent plunge in production in the first quarter of this year, compared to the December 2008 quarter.
In Namibia this entailed Namdeb imposing a three-month production holiday starting in April, following massive production cuts started in November, and coupled with a voluntary separation exercise that saw the mining giant shed 578 staff by the end of March.
However, despite a slight rise in demand for rough diamonds, De Beers isn't jumping for joy just yet.
"One of the very difficult aspects of this global economic crisis is that it continues to be fluid and unpredictable, and clearly an important aspect in all of this is consumer confidence, of which we are beginning to see a significant improvement. All in all, we are cautiously optimistic about the prospects for a recovery from this crisis," says Kali.
He adds that production will remain in line with demand, signalling that the end of Namdeb's production holiday will not necessarily mean a return to full production.
Dispelling speculation that the production holiday will be extended another four months, Hilifa Mbako, Manager for Corporate Communications and External Affairs at Namdeb, said plans for workers to return to duty on July 1 remain on course.
"The production holiday has definitely not been extended, and there has been no discussion about extending it," he said.
Production at mines in Botswana  resumed last month already, after a 50-day production halt.
Mbako also disputed claims that workers had not received their voluntary separation packages, saying that "all packages have been paid out, and everything is on track regarding the production holiday".
He added that once workers returned on July 1, they would undergo "a rehabilitation and retraining process" for three weeks to re-acquaint themselves with safety procedures at the mines before starting production.
Second quarter production for DeBeers is expected to pick up, with production having re-commenced in Botswana, which usually accounts for 65 per cent of DeBeers' production, but levels will nonetheless remain considerably low."

From last weeks NEW ERA newspaper, more diamond news...

I work for a co that does Condition Monitoring. We have a monthly contract with Debswana and our guys are up there today for the first time in 4 months.

Mmmh! Hopefully there is light at the end of the tunnel....  :ciupa1:

Diamond News From SOuth Africa"

"Court rules against De Beers
June 11, 2009

The Labour Court had ruled that De Beers had acted unlawfully when it retrenched workers, the National Union of Mineworkers said yesterday. The union said it had approached the court for relief after De Beers served its members with Section 189 notices and retrenched them without following due processes as stipulated in the Labour Relations Act. While it had agreed with lay-offs, it said, the process had not been followed properly. - Sapa"

LONDON - De Beers, the world's largest diamond mining group, is close to securing a covenant waiver on $3-billion of existing loans, two bankers said on Friday.

De Beers, 45% owned by mining conglomerate Anglo America Plc, is seeking a waiver to avoid breaching loan covenants at the end of the second quarter, the bankers said, as the company seeks temporarily to loosen the terms.

The waiver will suspend covenant tests until September by when trading conditions are expected to have improved and is due to be agreed on by Friday, one of the bankers said.

Lenders will receive an upfront fee in return for agreeing the waiver and the interest margin on the existing financing will be increased from 35 basis points to current market levels of around 200 to 300 basis points, he added.

De Beers is also seeking to refinance $1,5-billion of loans maturing in March 2010, according to a company spokesman, adding De Beers' remaining loans do not mature until 2012.

The spokesman said loan covenants were not an issue, discussions on the $1,5-billion refinancing were progressing after a month of talks and that no deadline had been set for the end of negotiations.

DIE einde van 'n produksie-onderbreking van drie maande by Namibië se grootste diamantmyn, NamDeb, breek op 1 Julie aan en 'n geskatte 1 300 werkers keer van volgende week af terug na Oranjemund om die myn weer in bedryf te stel.

Te midde van bespiegelinge en vrese onder die arbeidsmag van NamDeb, het die maatskappy gister die versekering gegee dat geen verdere afdankings of vrywillige uitdienstredings op die tafel is nie. Tot nou toe is die omvang van verliese vir die myn en regeringsinkomste weens die sluiting nie bekend nie, maar NamDeb is tevrede dat besparings van tot soveel as N$100 miljoen bewerkstellig kon word.

Alle mynbedrywighede is op 1 April vanjaar by NamDeb se ses myne in die Sperrgebiet gestaak en sowat tagtig persent van die totale arbeidsmag van 1 600 is met verpligte verlof gestuur. Die produksievakansie het nie mariene ontginning geraak nie.

Net sleutelpersoneel het op Oranjemund en in die myngebied aangebly om basiese instandhouding te doen. NamDeb se hospitaal, skole op Oranjemund en die bestuursmaatskappy van Oranjemund het ook soos normaal voortgegaan.

Vroeër vanjaar het NamDeb se moedermaatskappy, De Beers, 'n soortgelyke produksievakansie van vyftig dae in Botswana ingestel. Net een van Botswana se diamantmyne, Damtshaa, sal vir die res van die jaar gesluit bly, maar die ander drie myne is reeds weer in produksie.

Die groepbestuurder van eksterne en korporatiewe kommunikasie van NamDeb, mnr. Hilifa Mbako, het aan Republikein gesê die hervatting van mynbedrywighede op 1 Julie vind plaas op 'n tydstip waarop die wêreld hom vir 'n herlewing in die diamantbedryf gereed maak. Volgens alle aanduidings gaan Namibië se totale diamantproduksie in 2009 tot minder as 800 000 karaat daal wat 63% minder is as die 2,1 miljoen karaat wat in 2008 ontgin is.

Die vooruitsigte vir vanjaar is die swakste in die myn se geskiedenis sedert 1990 toe net sowat 750 000 karaat ontgin kon word.

"Intelligensie dui daarop dat die vooruitsig bestaan dat wêreldaanvraag sal toeneem en ons maak daarop staat. Daar is positiewe tekens vir herstel, maar ons is nog nie uit die oerwoud nie al is die tekens daar dat ons daarvoor kan regmaak," het mnr. Mbako gesê.

Oor die terugkeer van die sowat 1 300 werknemers wat tans nog met vakansie is en die heropening van die myn, het mnr. Mbako daarop gewys dat alle werkers op afgeleë gebiede reeds per radio en deur persoonlike kontak in kennis gestel is dat hulle aanstaande week vir diens na Oranjemund moet terugkeer.

NamDeb het ook verskeie busse gereël wat werkers na die diamantgebiede sal terugneem. Volgens hom heers opgewondenheid by die werkers, veral nadat vrese ontstaan het dat die produksievakansie 'n manier was om van hulle ontslae te raak.

Mnr. Mbako het egter die versekering gegee dat NamDeb geen verdere afdankings of skeidingsprosesse beplan nie. "Beslis nie. Ons is deur 'n pynlike skeidingsoefening. Ons het die getalle bereik ten opsigte van ons produksieteikens en ons het 'n onderneming gegee dat geen verdere afdankings gaan plaasvind nie.

"Ons gaan dit gestand doen, maar ons beskik nie oor 'n kristalbal wat ons in staat stel om te sien wat in die toekoms gaan gebeur nie. Ons huidige planne maak nie vir so iets voorsiening nie," het hy gesê.

The Telegraph reports that giant diamond miner De Beers has been granted a temporary covenant waiver on its £1.8 billion debt and is bringing in advisers to facilitate major restructuring of the diamond company.

The world's leading diamond miner, which due to the global recession has been hit by a severe downturn in demand for diamonds, has secured a delay on the tests to September.

Banks which approved the waiver include Barclays Capital, Royal Bank of Scotland, Lloyds Banking Group, Scotia Capital and Standard Chartered. In return for the waiver, the banks are to be paid an upfront fee and a higher interest rate on the debt.

De Beers needed the support of two-thirds of its syndicate to win the waiver for the next three months. The extra time will enable the diamond mining company to complete major restructuring.

The Telegraph discloses that De Beers has hired a leading accountancy firm to help with the refinancing of £900m of loans maturing in March next year. The company's remaining loans will mature in 2012.

Namdeb back on track
PRODUCTION has started again. On Wednesday of last week, the Managing Director of Namdeb, Inge Zaamwani-Kamwi, welcomed employees back during a mass meeting which was held at Oranjemund.

The meeting was preceded by a long distance bus transportation programme bringing back employees from all corners of Namibia. Senior management, including the General Manager accompanied the employees on the returning busses and to gain an appreciation of the distances involved.

Since November last year, Namdeb has sought to keep the Namibian nation informed about the negative impact that the global economic downturn has had on the diamond industry. One of the mitigating measures was the institution of a three month production interruption aimed at savings costs. It is important to remember that the situation the industry is in, is a global economic phenomenon, which is beyond our control and is negatively affecting many businesses around the world.

Namdeb's employees have responded positively with thought and action to the mitigating measures put in place since the beginning of the recession. They are therefore the heroes in the company's efforts to ensure a sustainable diamond future that is beginning to bear fruits as they returned to work this week.

In her address, Ms Zaamwani- Kamwi highlighted the importance of good safety and health practices, urging everyone to adopt a safety based behavioural culture. She noted that, while in the first half of the year financial performance was much better than anticipated, challenging times still remain.

"While the global economy seems to be on the road to recovery mode, it is important that we work smarter at all times so that we can do more with less."

Speaking about the importance for continuous responsiveness to the global recession, Ms Zaamwani- Kamwi stated that a prerequisite for building a "New Namdeb" was embracing a culture of continuous business improvement.

One of the spinoffs of the global economic downturn was the realization of how flexible and adaptable Namdeb is to the changing global economic environment. "It is this level of flexibility that Namdeb will have to continue demonstrating to ensure that it remains viable and profitable."

The welcoming meeting was followed by a full-day programme of sports activities aimed at team alignment and safety, thereby readying and reconditioning the body and mind following the three months leave. There was excitement everywhere as employees demonstrated their enthusiasm of being back to work.

The week's re-orientation pron gramme was concluded with a learning expo, aptly named the "Village of Learning" exhibition.

The objective was to create awareness and rekindle pride and enthusiasm by showcasing various aspects of Namdeb's business.

Under the theme "Diamond Pipeline", exhibitors at various stalls included local entrepreneurs and Namdeb business partners and contractors. The Namdeb exhibitions covered areas such as exploration, mining, processing, engineering services and projects and service areas.

An overwhelming number of Namdeb employees (about 84%) visited the stalls over the two-day period.

Wow, what exciting news indeed !!
Long live Oranjemund.

You all have more than likely heard about the selling of certain Anglo assets..... to ease their $11 billion debt...... many are3 wondering if they intend on selling their stake in DeBeers... here's a snippet from an article I read today...

"One of Anglo's assets conspicuous in its absence from the restructuring announcement was De Beers, the diamond giant in which Anglo holds a 45% stake. This prompted some commentators to question whether diamonds were still core to the company's strategy and whether an exit from the cash-hungry business might be on the cards at some point.

"We continue to see diamonds as a core business of ours," Carroll said. Asked whether Anglo would retain its 45% stake, she said: "That's our thinking today.""

Not diamond related but Anglo... They intend selling off the Skorpion plant at Rosh Pinah to a Chinese consortium... apparently it's common knowledge already.
Something to do with the current plant treatment or extraction process unable to process the the ore of the new reserves... the weigh-up is it's more viable to swing this plant and build new than to convert it for the new ore type.

Briefed today everybody is getting 50% of the yearly salary ooooooops monthly salary once of, Barganing unit guys you need to wait.

GM on  the international wires....

"Namdeb sees significant drop in output


Namdeb, a 50-50 joint venture between De Beers and the Namibian government, said yesterday diamond output for this year would be less than half that of last year after it scaled down output, Reuters reported.

"We've been planning to scale down our operations and the recession only accelerated the process by a year," Namdeb's GM Mitford Mundell told Reuters in an interview.

He said the company was faced with lower quality ore at its land operations and would not up production significantly until its brownfield expansion projects take fruit. Even then it would not go back to the levels seen before the recession.

Mundell said the company would produce 330,000 carats from its land operations this year and around 600,000 carats from its marine operations. That compares with a total output of 2.1 million carats in 2008.

He said next year the diamond producer expects to make just over 400,000 carats and 650,000 carats from its land and marine operations respectively, and would keep around those levels in the next few years.

Namdeb shut down all its operations for three months this year to preserve cash and to use up some of its stockpiles. Its workforce has also been reduced by about half, Mundell said."

Brownfield projects........ wonder where that is....

Wonder if it's up Ebay way? Braunveldt?

or something to the effect!

My understanding ...  the term greenfield is used for a totally new  setup ie :  a greenfield project  for a factory would  be a new site new infrastructure , everything .. in that terminology  brownfield would be upgrading / utilising existing  infrastructure  ,, in this  current scenario , possibly wisest ??? under correction   so  hammer  away  ...

in that case... the ebay plant would be the spot......

 GARETH Penny, MD of diamond miner De Beers, announced on Tuesday that shareholders of Debswana - the Government of the Republic of Botswana and De Beers - had given the green light to proceed with a major extension project at Jwaneng, the world's flagship diamond mine.

The project, also known as Cut-8, is a key component of Debswana's North Star strategy and is the largest ever single capital commitment in the private sector in Botswana.

Cut-8 will ensure profitable and continuous production at the mine until at least 2025. Debswana will invest $500m in capital expenditure and, taking into account all project stages - including feasibility, design, implementation and mining operations, as well as the cost of plant and equipment - the estimated project investment is likely to total $3bn over the next 15 years.

At its peak, the project will create more than 1,000 jobs, De Beers said.

The development will require the removal of over 700 million tonnes of waste between 2010 and 2024, exposing an additional 78 million tonnes of diamond bearing ore, and deepening the Jwaneng pit to a depth of 650 metres.

It is anticipated that this will create access to a further 95 million carats, which could be worth in excess of $15bn over the life of the mine.

Speaking at an industry town hall meeting in Gaborone, Botswana, on Tuesday afternoon, Penny said: "Successfully managing a project of this magnitude and bringing it in on time, on budget, with zero harm to persons and property, and at a minimal impact to the environment, requires a dedicated and steadfast team. The De Beers board has every confidence in Debswana's ability to implement the project to these exacting standards and generate the returns expected."

During his presentation Penny noted that demand for diamonds had been consistently increasing for many years, and as the world recovers from the recession this trend is expected to continue in the long term – particularly as more high net-worth individuals emerge in the developing markets of China and India.

At the same time, there have been no new major diamond discoveries in more than a decade, and the growing demand is likely to significantly outpace what is forecast to be lower levels of diamond supply for many years to come.

Jwaneng Mine contributes approximately 70% of Debswana's total revenue. Diamonds from Debswana, in turn, contribute 50% of public revenue, 33% of GDP, and over 80% of foreign earnings to Botswana.

Anglo American has agreed in principle to invest another $450-million in diamond company De Beers, Anglo spokesperson James Wyatt-Tilby told Mining Weekly Online on Tuesday.

"Yes, Anglo American has agreed in principle to invest up to $450-million to follow its rights in a De Beers rights issue of up to $1-billion," Wyatt-Tilby said, in response to a Mining Weekly Online question.

"I should add that discussions between De Beers and its banks are ongoing, hence no definitive agreements at this stage," Wyatt-Tilby said.

This follows the $500-million loan that Anglo, which owns 45% of the shares of De Beers, as well as the Oppenheimer family with 40%, and the Botswana government with 15%, provided to the meltdown-hit diamond-mining company in April, in what De Beers MD Gareth Penny described as "additional subordinated loan funding".

Asked in July whether De Beers would need to negotiate any further funding in addition to a $1,5-billion facility that the diamond company was renegotiating well ahead of its March 2010 due date, Penny said he did not anticipate that the company would have to arrange any further funding.

Now De Beers spokesperson Lynette Gould informs Mining Weekly Online all three shareholders have in principle agreed to invest in De Beers again, this time by way of a rights issue, to raise a further $1-billion.

Gould pointed out, however, that the new capital raising would lower De Beers' level of external debt, improve the company's capital structure, and place it in a position to take advantage of any new opportunities that might arise, as the diamond market moved out of recession and into recovery mode.

Gould added, however, that the in-principle decision of the three shareholders to follow their rights would be subject to De Beers' gaining satisfactory refinancing terms for its existing debt.

In following their rights, the Oppenheimer family would be required to invest $400-million and the Botswana government $150-million.

Gould described as "positive and productive" De Beers' process of renegotiating its $1,5-billion standby debt facility that falls due in four months. De Beers' other debt facility of $1,7-billion falls due only in 2012.

In July, Penny said that De Beers had still not dipped into the $500-million loan that its three shareholders had given it in the first six months of this year.

Penny told a "town hall" diamond meeting in Johannesburg last Wednesday that, although the global diamond market had improved, it was still some way from being "out of the woods".

He reported, however, that all De Beers' South African mines had been reopened, bar Namaqualand.

In Botswana, operations at the two big mines, Orapa and Jwaneng, had resumed, and only the small Damtshaa mine remained closed. Production was also under way in Namibia and Canada.

"We are probably now at 80% of our total mining capacity," he said.

Penny also revealed that De Beers and US diamond retailers had financed the new Love Knot diamond advertising campaign, which was expected to boost diamond sales during the Thanksgiving-to-Christmas period.

It was estimated that 100 million Americans would see the advertisement, which features a song that one in ten American brides are said to choose to dance to at their wedding celebrations.

In July, Penny reported De Beers net cash position to be $622-million, more than four times its net cash of $147-million in December.

Anglo American CFO Rene Medori in February revealed that Anglo, as one of the three big shareholders in De Beers, had participated, along with the Oppenheimer family and the Botswana government, in providing the $500-million loan, and that Anglo's share was $225-million.

Medori said that Anglo's loan to De Beers would be interest free for the first two years and subject to market pricing thereafter.

Penny later revealed that the R500-million shareholder loan remained unutilised, and was providing the company with financial headroom in uncertain times.

"We are happy that we have got that headroom. The shareholders have put it in on the basis that it is staying in the company, certainly for the foreseeable future.

"So, it's not a case of having to repay that now or not utilising it. It's there to make sure that De Beers is in a robust position and is able to face the future with confidence," Penny added at the time.

Mining Weekly Online was, however, unable to establish whether this was still the case, or whether all or part of the $500-million had since been used up.

Founded in 1888 and delisted in 2001, De Beers mines and markets 40% of the value of the world's rough diamonds.

All this  debt .... ??? although  our company  is now leveraged through a loan  from  empowerment deals  it still pays its debts ... and yes  our overdraft facility is watched closely .. and bosslady gets skittish if it  increases  ... when we have to make strategic raw material ourchases we use it , but try to keep it   on zero ... to the point that we actually bought a new machine using the overdraft facility  as opposed to taking out a loan  cheaper than   a finance deal .. ... seems to me  lots of smoke and mirrirs when shareholders invovlved  mmm ???  is this the face of business  nowadays .??? .  debt .. promises   and hopes   hopefully not dashed ..???

De Beers, the world's largest diamond miner, is set to launch a rights issue to raise up to $1bn (£601m).

After a difficult year that saw diamond prices collapse and De Beers profits fall by 99 per cent, the group faces a $1.5bn debt refinancing in March, out of total net debt of $4bn.

The new money will be used to pay down the debt and also help De Beers take advantage of a recovery in the global economy, the company said yesterday. "By reducing De Beers' level of external debt and improving its capital structure, this investment would better enable the company to take advantage of new opportunities... as the recession gives way to recovery," the company said.

Mining giant Anglo American owns 45 per cent of the diamond producers' shares. A further 40 per cent is held by South Africa's Oppenheimer family, and the remaining 15 per cent is owned by the government of Botswana.

De Beers said yesterday that all three shareholders have agreed in principle to support the issuing of new equity. It has already borrowed nearly $750m in shareholder loans.

In July the company blamed the "extraordinarily difficult" trading environment for half-year profits of just $3m, compared with $316m the year before. It was forced to cut production in South Africa, Botswana and Canada as the global economy slipped into recession and spending on diamonds plummeted.

Stephen Lussier, a De Beers' director, said last month that a deal with the creditor banks was expected around Christmas, although the full refinancing was not likely before early 2010.

Looks Promising....

"London - Top diamond miner De Beers is upbeat about cash flow after slashing costs by half and is making progress on shoring up its balance sheet after agreeing refinancing terms.

The group - 45 percent-owned by mining group Anglo American - said on Friday it was moving forward on refinancing a $1.5bn debt facility and a rights issue of up to $1 billion announced last month.

"We've agreed a set of terms with our international lenders," David Prager, director of communications, told Reuters. "That process will come to a conclusion over the next several weeks. We're feeling very good about it."

Once the refinancing process is concluded, shareholders will commit funding to help recapitalise the business through the rights issue, he added.

Last month, De Beers said Anglo and other shareholders had agreed to a rights issue to cut its $4bn of debt. The debt facility expires in March.

South Africa's Oppenheimer family owns 40 percent of De Beers and the Botswana government owns the remaining 15 percent.

The group was well placed after cutting costs by 50 percent last year during a slump that hammered the sector, Prager said in an interview.

"We're starting to see demand return and prices beginning to rise and it takes half the cost to produce what we produce," he said. "In the future you can see how that is positive for growth and makes us a strong cash-generative business."

Healthy demand

Christmas sales in the United States, which makes up about half of the diamond jewellery market, were slightly better than expected and demand for rough, or unpolished, diamonds was still healthy, he said.

"We're feeling quite good about the level of production we're at and the price we're at because there's demand for it.

"The 'sight' (sales event) that just ended this week showed very healthy demand coming out of Christmas, so we were quite pleased."

The group - with mines in Botswana, South Africa, Namibia and Canada - sells to specially selected clients, "sightholders", at 10 week-long sales events during the year.

De Beers - which controls about 40 percent of the rough diamond market - posted a 99 percent plunge in first-half net profit to $3 million in July after it closed mines in response to sliding prices amid the global downturn.

The group slashed output in early 2009 and its biggest unit in Botswana shut down completely for several months after demand for luxury goods plummeted. The mines are open again, but at reduced levels as the sector adjusts to the post-crisis economy.

"Production will surely go up in 2010, but only in response to demand going up from clients," Prager said.

De Beers has forecast 2009 output would be around half the level of the 48.1 million carats produced the previous year.

The group cut jobs by 20-25 percent last year in response to the downturn, but Botswana unit Debswana has launched a separate restructuring exercise which is due to conclude in the first quarter of 2011, Prager said.

Debswana, which accounts for the bulk of De Beers output, is a 50-50 joint venture with the Botswana government.

De Beers is due to release annual results on February 11."

The Diamond Route, which makes 250 000 ha of cross-regional private conservation land owned by diamond-miner De Beers and the Oppenheimer family accessible to tourists, was "open for business", said Diamond Route chairperson Rob Smart at the launch of the initiative.

The Diamond Route is a partnership in environmental conservation and tourism and includes insight into South Africa's cultural, historical, and diamond-mining features. It links nine sites across South Africa and is made up of property owned by both De Beers and the Oppenheimer family. The empowerment partner is Ponahalo Holdings.

It stretches from the far west of the country at the Namaqualand diamond coast site next to the Namaqualand National Park, moves east to Kimberley, which includes the Kimberley big hole site, the Benfontein reserve, the Dronfield nature reserve and the Rooipoort nature reserve, and on to the Tswalu Kalahari reserve, then up to the Brenthurst Gardens in Johannesburg, and the Ezemvelo nature reserve near Pretoria, and finally up to the Venetia Limpopo Nature reserve near Musina.

The project would develop each site's ecological, cultural and heritage characteristics and it was also the ambition to extend the Route beyond the borders of South Africa and into Botswana and Namibia, where De Beers also has operations.

"Together, we will make a lasting contribution to conservation and enhance environmental awareness in communities in the areas in which we operate, illustrating the good that diamonds do," said Smart.

"The Diamond Route starts with us understanding nature, and that we must interact responsibly with nature. We must preserve the areas where we operate so that people can see the legacy of what we leave behind when we finish mining," said De Beers Consolidated Mines MD David Noko.

"Diamonds are the ultimate product of nature - man has the small task of releasing their beauty. Knowing that our product comes from nature, and is an emotional product, we realise that we must 'live up' to the diamonds," said De Beers chairperson Nicky Oppenheimer.

Possibly the most famous diamond-mining town, known as the home of De Beers, Kimberley plays a central role in the diamond route. Tourists can view the "big hole" as well as its historically rich museum and the old town. The central attraction is also surrounded by three sites, which are currently operating as nature reserves, namely Dronfield, Rooipoort, and Benfontein, each of which has accommodation available.

It was hoped that the Diamond Route would enhance environmental awareness among De Beers employees, the communities and the youth, and would also leverage training and educational opportunities, and support community development. Links with universities for shared research opportunities exist.

The concept of the Diamond Route was launched in 2004, when a memorandum of understanding was signed between De Beers, Ernest Oppenheimer & Son, and Birdlife South Africa. Since then, the logo and brand have been rolled out; accommodation and facilities have been upgraded; birding, insects, heritage sites, conservation initiatives, 4x4 trails, and hiking trails have been developed; 14 bird guides have been trained; and five cultural guides have been trained.

"I extend the invitation to jealously guard against degradation of the environment. The shareholders and the Oppenheiner family are absolutely committed to this journey. I am, and my organisation is committed - the challenge is that we all must be," said Noko.

"The Diamond Route is about embracing something much bigger than an eco-tourism trip," added Strilli Oppenheimer, who is the patron of the Diamond Route

ANGLO American will invest $450m in diamond group De Beers, which is issuing $1bn worth of equity to secure banking facilities and grow the world's largest supplier of rough diamonds.

The decision follows this week's R12.5bn rights offer by Anglo Platinum in which Anglo holds a 79.2% stake. Anglo followed its rights and has underwritten the balance of the offer.

In December last year, De Beers said its three shareholders, Anglo, the Oppenheimer family and the Botswana government, had agreed in principle to a rights issue of up to $1bn to cut its $4bn of debt.

De Beers shut mines early in 2009 to combat the fall in rough diamond prices caused by the global economic slump, which dried up spending on luxury goods. De Beers recorded a 99% fall in its first half profit. Management said it was reducing production to match the fall in demand. It has subsequently returned all its mines to production.

De Beers has been negotiating the refinancing of a $1.5bn debt facility, wanting to renew it before if fell due in March this year. Reuters has reported De Beers has debt of $2bn that falls due in 2012 and a further $500m in other facilities.

Anglo pointed out De Beers has restructured its business, making a 23% cut in its global workforce and bringing operating costs down by nearly half.

"The rights issue forms part of a wider refinancing package for De Beers designed to provide the company with a more appropriate capital structure and to secure ongoing banking facilities, at a time when the demand outlook for diamonds is improved, and to enable De Beers to invest in its future growth as the world�s leading diamond business," Anglo said.

London - Petra Diamonds sold a 507 carat diamond for $35.3 million on Friday, breaking a record for the highest price ever paid for a rough diamond.

Analysts had estimated the value of the stone, one of the 20 biggest high-quality rough diamonds, at about $25 million.

"It is fitting that the Cullinan Heritage should achieve a sale price of $35.3m, the highest sale price on record ever achieved for a rough diamond, as it has the potential to produce one of the world's most important polished gems," CEO Johan Dippenaar said.

London-listed Petra said in a statement the gem was purchased in a tender by Chow Tai Fook Jewellery Co Ltd in Hong Kong.

Proceeds will help boost Petra's profit for its fiscal year to end-June, after the firm registered a swing to a first-half profit on higher production and sales.

AIM-listed Petra found the gem last September at its 74%-owned Cullinan mine in South Africa, which it bought from sector giant De Beers in 2007.

The Cullinan mine has been the source of many large diamonds, including the world's largest rough diamond - the Cullinan - at 3 106 carats. That gem was cut into the Star of Africa stones that are now set in Britain's crown jewels.

Petra was a member of a consortium that paid $148m when buying the Cullinan mine from De Beers, which is 45% owned by mining group Anglo American.

LINK: http://www.miningweekly.com/article/350-finsch-diamond-jobs-at-risk-as-de-beers-fights-huge-losses-2010-05-06



"The jobs of more than one-third of the employees at De Beers Finsch diamond mine in the Northern Cape are on the line as the company restructures in order to avoid losing R200-million a year.

De Beers said on Thursday that 350 jobs out of the current complement of 903 may be shed at Finsch, which is one of six De Beers Consolidated Mines (DBCM) mines that employ a total of 2 500 people in South Africa. DBCM is the South African arm of the global diamond business.

De Beers said that the factors impacting on Finsch's profitability included high costs, low sub-2008 diamond prices, declining Block 4 grades and rand strength.

Despite the many steps that the operation had taken to cut costs, the current financial environment continued to impact adversely on the mine's sustainability, and retrenchment would have to take place in order to ensure the mine's sustainability.

Some of the estimated 350 positions were vacancies, and a consultation process would determine the final number of employees that would be affected.

"It is therefore impossible to predict the actual number of people who may finally be affected, until the two-month consultation process is concluded," De Beers added in a media release.

The company would be exploring inter-company transfers, voluntary early retirement, voluntary retrenchment packages and other opportunities for reasonable alternative employment in order to minimise the impact on employees."

21.05.10
Namdeb records 400m loss
By: JO-MARÉ DUDDY


THE global recession, and subsequent drop in demand for luxury goods worldwide, smashed Namdeb's net profits of N$598 million in 2008 into a net loss of N$414 million last year.
Had it not been that Government granted the company a tax breather of N$141 million for 2009, the financial damage would have been even bigger. However, the deferred tax asset meant that not a cent flowed into the tax coffers of the State – compared to tax of N$1,4 billion Namdeb paid in 2008.
Releasing the company's 2009 financial results late yesterday, Namdeb Managing Director Inge Zaamwani-Kamwi said the year presented "some of the most challenging trading conditions the diamond industry has ever experienced".
She attributed the rough times to three factors: high stock levels throughout the diamond pipeline, tight cash flow and money-strapped consumers losing their appetite for the gems.
Carats sold dropped by 25 per cent from 1,8 million in 2008 to 1,4 million, while carats produced plummeted by 56 per cent – from 2,1 million to 929 000. Diamond sales brought in only N$3,4 billion in 2009, 40 per cent less than the previous year.
By December 31 last year, Namdeb was in the red with N$11 million as far as cash and cash equivalents were concerned, after starting the year with N$34 million. The company was stranded with a net bank overdraft of N$11 million. Namdeb ended 2008 without any overdraft.
Total assets crumbled from N$3 billion at the end of 2008 to N$1,7 billion twelve months later.
The poor results meant that Namdeb was the second worst performer in the De Beers family in 2009.
Whereas the company contributed 4,4 per cent to De Beers' total production of 48,1 million carats in 2008, it could only manage 3,8 per cent in 2009.
The voluntary separation offered to some of Namdeb's workforce, as well as production shutdowns, resulted in production costs dropping from N$4,2 million in 2008 to N$2,8 million.
Zaamwani-Kamwi was cautious about whether the industry would regain some of its sparkle this year.
"As a result of Namdeb's actions, production levels and cost base [which] has been aligned with the reduced demand and inventory and debt levels reduced, and with better than expected consumer sales in the fourth quarter, sentiment has improved markedly from a year ago," she said.
"However, Namdeb will continue to take a cautious and prudent approach to production and sales levels for 2010," she added.
Zaamwani-Kamwi said consumer demand for diamond jewellery is beginning to recover, driven in part by the strength of the developing markets of China and India.
"However, with the fragility of the world economy and perceived weakness of the global recovery post recession, the company would only expect a gradual increase in production levels, sales and prices," she said.

South Africa's National Union of Mineworkers (NUM) said on Friday it plans an indefinite strike over wages starting on Sunday at the world's biggest diamond producer De Beers.

"The NUM will this morning issue a 24 hour notice to begin a strike on Sunday at all De Beers operations in the country which includes amongst others Voorspoed, Finsch, Namaqualand and Venetia," the NUM, the country's biggest union, said.


The union said in a statement it wants a 15 percent increase in wages, while De Beers, 45 percent owned by global miner Anglo American has offered 8 percent.

They  just following the trail left by the stadium workers and recently the transnet lot .. impossible demands and huge losses in  business  and ultimately  revenue .. business should embark  on  class action suits  and sue these unions for losses   or damage and cripple  them ...............

South Africa's National Union of Mineworkers (NUM) said on Saturday it would suspend a strike at the world's biggest diamond producer De Beers while it considers a new company wage offer that could end the dispute.

"If they put it in a formal wage agreement it is likely that we will accept... although we still have to consult our members," NUM spokesman Lesiba Seshoka said.

The strike, which had been due to start on Sunday at all of the company's operations in the country, will be pushed back three days following the new offer made by De Beers late on Friday, Seshoka told Reuters.

"The strike will be suspended to see if we can reach an agreement on Monday. We want De Beers to put it all in a formal wage agreement before cancelling the strike completely," Seshoka told Reuters.

"If we can't reach a formal wage agreement, we will strike from Wednesday," he said.

In its latest offer De Beers, 45 percent owned by global miner Anglo American, proposed raising wages by between 9.5-10 percent and said it was confident of a deal. The union had originally asked for 15 percent.h

"We sought to find common ground with the NUM negotiating team and we have reached that point," Wayne Smerdon, De Beers' industrial relations head, said in a statement.
Click here!


The NUM strike threat was the latest in a series of recent wage disputes in which unions have pressed for increases far above the inflation rate of 5.1 percent, something which economists say might hamper South Africa's recovery from its first recession in 17 years.

A three-week strike at logistics group Transnet, which ended on Thursday, paralysed ports and railways and dented exports and imports in Africa's biggest economy with economists estimating losses at above R7 billion.

Labour federation Cosatu, a powerful ally of the ruling African National Congress with nearly 2 million members, has said it may strike during the World Cup over power price hikes if authorities fail to lower the tariffs.

The ANC dismissed the threats of a national strike.

De Beers said the settlement to its dispute would affect 1 587 out of the company's total 5 500 workers in South Africa.

The company reported a strong first quarter to the end of March with sales five times the level of last year, but is still cautious about the global recovery.

De Beers, which controls around 40 percent of the rough diamond market, was hit hard during the downturn as consumers shied away from luxury goods. - Reuters

The National Union of Mineworkers (NUM), which has just signed a wage agreement with De Beers, on Wednesday warned the diamond giant that it would fight plans to retrench more than 350 workers at its Finsch mine in the Northern Cape.

The NUM said the diamond giant had issued an "irregular" section 189 notice notifying its workforce of its intention to sack the workers.

"The diamond giant which has this morning settled its wage dispute with the NUM is now faced with an even bigger battle as the NUM intends to fight off the envisaged retrenchments," said the trade union.

NUM's regional secretary in Kimberly Tshimane Montoedi said a war was looming.

"When De Beers engaged us, it spoke of unfavourable economic conditions referring to the recession, but the recession is over now," said Montoedi.

The NUM wants De Beers to revisit its strategy and reverse its intention to retrench the workers.

In the meantime, the signing of the wage agreement averted a strike at De Beers South African operations.

The NUM had planned to strike on Sunday last week but last minute negotiations with De Beers meant the strike was postponed for three days.

Originally, NUM demanded a 15% pay increase against De Beers' offer of 8%. But the diamond giant's latest offer will see increases of between 9.5% and 10% implemented.

Here;s the big tale,  Gareth Penny to resign!

LINK:http://www.miningmx.com/news/diamonds/De-Beers-Penny-quits-firm.htm

"

   

GARETH Penny who during five years as CEO of De Beers presided over profound changes in the way the Anglo American-owned group operated, said on Friday he would quit the company "in the coming months".
The announcement comes amid a resounding return to financial health for De Beers in the first half of the 2010 financial year following a dismal time in 2009 in which it slashed output and waded into its cost base lopping off a quarter of total staff.
Earnings before interest, tax, depreciation and amortisation doubled to $762m in the six months to end-June while the board confirmed complex rescheduling and shuffling of debt had eased the pressure on its balance sheet.
The profit improvement was owing to far improved economic conditions in which consumers returned to jewellers shops again, particularly in India and China, and the cutting industry began the process of restocking inventories.
Sales of rough diamonds to the DTC, De Beers trading company based in London, totalled $2.6bn including attributable sales from joint ventures the group operates.
De Beers, which also mines diamonds as well as selling them to manufacturers, saw production increase to 15.4 million carats. Carats recovered in the first half of last year totallled only 6.6 million following severe mine cutbacks.
Commenting on the resignation of Penny, De Beers chairman, Nicky Oppenheimer said Penny had positioned the firm for strong revenue growth.
Yet De Beers acknowledged the global economic recovery remained "fragile" especially in the US, Japan and Europe such that it viewed the remainder of the 2010 financial year "with caution and measured optimism".
Said De Beers: "With most restocking activity by the trade now largely completed, further demand growth is dependent on increases in consumer demand, and De Beers remains encouraged by the strength of demand in the emerging markets of Asia, particularly China and India."
Penny resignation unsurprising
The market had been aware of speculation over the past six months that Penny was being asked to step aside so that fresh management could take the company forward.
This was partly linked to some expectations among top-rated analysts that De Beers, which is 45% owned by Anglo American, was considering relisting after being taken private by the Oppenheimer family in 2000.
Both De Beers and Anglo American have told Miningmx that a listing is not on the horizon.
Speaking to Reuters on Friday, Penny said: "Our shareholders have indicated no desire at all to IPO this business. There are not any plans being worked on and that is the bottom line".
Sources close to the situation told Reuters in May that De Beers' owners, including mining group Anglo American, had been considering a possible re-listing of the firm, but felt the time was not right yet.
Penny declined to comment on whether an initial public offering was a future option, saying he had no further information to provide.
In addition to Anglo American, De Beers other shareholders are the Oppenheimer family (40%) and the Botswana government which has a 15% stake.
Said Oppenheimer regarding Penny's plan to resign: "Gareth has made an enormous contribution to De Beers throughout his 22 years with the company and, most recently, five years as CEO.
"He has been a passionate and effective leader during some of the most difficult challenges De Beers has faced in its long history."
De Beers said the process to find a replacement for Penny was underway during which time the group's chief financial officer, Stuart Brown, and Bruce Cleaver, its chief commercial officer, would serve as joint acting CEOs.
There were other changes in the De Beers directorate with Sir Chips Keswick and Oppenheimer family member, Anthony Oppenheimer, both resigning from the board after 17 and 30 years experience respectively.
One of De Beers most recent challenges was its balance sheet where debt and third party debt was $3.2bn and $3.09bn respectively.
In its results commentary, De Beers said net debt now amounted to $1.98bn while third party debt was reduced to $1.87bn.
However, the group is not completely out of the woods with gearing on total debt still relatively high at 42.5% compared to 57.9% in December 2009.
"It's still a bit high, but much better than previously," said RBC Capital Markets diamond analyst, Des Kilalea of De Beers' total net gearing.
"Also remember that De Beers will be generating a lot more cash flow this year, possibly as much as $1bn EBIT if the markets are kind to it," he said."

A User's Comment:

"Not a day too soon for me
by Former DeB worker | Jul 23 2010
Not a day too soon for me. Glad to see the perfume salesman go. First they sold down the stockpile ($5bill) and awarded themselves gigantic bonuses for a job well done, failed to invest in the mines when they should of, fired most of their very competant people and ended up massively in debt. Great job, Gareth.
Wonder when Brown, Shine and the rest will join him on the dole queue?"

HARARE, Zimbabwe — Zimbabwe began selling hundreds of thousands of carats of rough diamonds Wednesday that were mined from an area where human rights groups say soldiers killed 200 people, raped women and forced children into hard labor.

Heavily armed police and soldiers guarded top security vaults built at the main Harare airport, where several private jets brought buyers from Israel, India, Lebanon and Russia, officials said.

Abbey Chikane, Zimbabwe monitor of the world diamond control body, certified the diamonds as ready for sale on Wednesday, having said controversy-plagued diamonds from two mines in eastern Zimbabwe met minimum international standards. Some 900,000 carats were put up for auction Wednesday, the mines ministry said.

Investigators for the world's diamond control body said last year that the gems were mined at the Marange diamond fields by virtual slaves who had been told to dig or die, and were smuggled out by soldiers who raped and beat civilians. Yet the Kimberley Process, the diamond body, said those gems didn't qualify as "blood diamonds."

Human Rights Watch says children as young as 10 were forced to work up to 11 hours a day in the Marange diamond fields with no pay or reward. The organization said it had reason to believe that at least 300 children were still working there as of February 2009.

Zimbabwe's mines ministry accuses human rights groups of "peddling falsehoods" over rights violations.

No estimated value was given for stones, although unofficial estimates range up to $2 billion, a massive boost for Zimbabwe's ailing economy and representing about one-third of the southern African country's national debt.

The eastern alluvial diamond fields were uncovered in 2006 and are estimated to be able to meet one-fourth of the world's demand for diamonds. The find is described as the biggest in southern Africa since diamonds were discovered at Kimberley in South Africa a century ago.

Mad  Bob ,,  Buddy of  our  ex president Thabob Mugabeki ... may his soul rot in hell for continuing  his atrocities ,, further more  they   that  deem the diamonds  as ethically mined  have got holes in their heads ,, this sale will flood the market , stuff up chances of recovery for the companies that   at least employ  folk and prop up economies , there will  be no benefit  to Zim excepting  more cash to prop up and keep in power  the  elite and connected to Bob  lifestyles and yes  slow down the  progress to some sort of democracy in Zim .. Wonder what  the leaders in Nam  will ow say about their "buddy " or will they do the usual  african turn the blind eye number  and instead blame the  misfortune on  the  past  legacy ???

From Mining Weekly

LINK: http://www.miningweekly.com/article/namdeb-more-than-doubles-first-half-diamond-production-2010-09-03

"Namdeb, the joint-venture (JV) mining company owned by De Beers and the government of Namibia, more than doubled its production during the first half of this year.

Diamond output increased by 106,5% to 795 000 ct in the six months ended June 30, 2010, compared with the 385 000 ct produced in the first half of 2009.

The majority of carats were produced by Namdeb's marine operations, which saw output climb to 538 000 ct in the period under review, compared with the 229 000 ct produced in the first half of the previous year.

The remainder of the production came from the land operations, where output increased to 257 000 ct in the first half of this year, compared with 156 000 ct the year before.

Namdeb, led by MD Inge Zaamwani-Kamwi, reported a strong operational and financial performance, recording a net profit of N$259-million, compared with a loss of N$396-million reported for the first half of 2009.

Namdeb's diamond revenues increased by 22% to N$1,8-billion, compared with revenues of N$1,5-billion the year before.

Zaamwani-Kamwi said that the mining company was looking to the remainder of 2010 with measured optimism.

While the increased demand for diamonds in the first half of the year was encouraging, most restocking activities were now complete and future demand growth would be dependent on increased consumer confidence, especially in emerging markets.

This, at a time, when the economies of important diamond markets, such as the US, Japan and Europe, were still fragile, she noted."

Namibia's diamond production has doubled in the first eight months of 2010, reaching 1.1 million carats of rough diamonds compared to the 552,000 carats produced in the corresponding period of 2009, news outlets report.

In value, Namibia produced nearly N$3 billion - US$438 million – between January and August 2010, a 26% increase.
In terms of month-to-month gains, August 2010 saw a rise in diamond production of 29.3% from July 2010, and a 59.5% increase over the corresponding month last year.

John Steytler, an economist with Windhoek Bank, noted that the country's increased diamond output was the result of higher demand for diamonds, not new diamond resources.

In August, Namdeb – a diamond company in which the Namibian government owns 50% and De Beers the other 50% - announced that over the next decade it would invest US$1 billion in its diamond mining projects on Namibia's coast.

Namdeb, a 50-50 joint venture between De Beers and the Namibian government, said in August it would invest $1 billion in the next 10 years to extend the life of its diamond mining operations near the coastal town of Oranjemund. Last week, De Beers South Africa Chief Executive Barend Petersen told Reuters that De Beers had abandoned marine diamond mining operations in South Africa and would concentrate its marine operations in Namibian waters.

"It's clearly more advantageous for us to mine the sea waters of Namibia that the South African sea waters," Reuters quoted Petersen saying.

 :ciupa1:

I wonder what percentages of those crews on the ships that have just moved to Namibian waters are actual Namibians....

I wonder how much money DeBeers as a group would have saved had the DeBeers Marine employees been told to reside in Omund and how much money would have been contributed into the local economy thus perhaps saving Oranjemund.....

From Mining Weekly, LINK: http://www.miningweekly.com/article/de-beers-botswana-investing-r25bn-in-ultra-rich-prince-of-pipes-jwaneng-diamond-mine-2010-10-19

"JWANENG, Botswana  – Botswana's De Beers-State-owned Debswana Diamond Company is investing R25-billion over the next 14 years in the ultra-rich Jwaneng diamond mine.

Debswana-Jwaneng GM Balisi Bonyongo, who addressed a visiting media contingent, says that the investment in the large Cut 8 project will extend the life of this 'Prince of Pipes' to 2024 and yield 102-million diamond carats.

Although the financial cost of completing the Cut 8 cutback is high, Bonyongo is determined to retain the prodigious profit margin of 60% to 70% of this high-value mine, 160 km south-west of Gaborone, on the fringes of the Kgalagadi desert.

"Jwaneng's the most valuable piece of diamond real estate on earth. There's nothing like it on the planet," Debswana mining manager Cut 8 James Kirby tells Mining Weekly Online.

The big Cut 8 project is not a growth project, however, but one aimed at stay-in-business replacement at this superior dollar-per-carat operation that would otherwise have run out of ore by 2017.

The 2 000-employee Jwaneng contributes 70% of Debswana's total diamond revenue and is a crucial contributor to the economy of Botswana as a whole.

While the capital-intensity of the equipment-profuse open-pit mining activity persists, people costs and productivity issues are also rearing their heads, as the large pit descends from the current depth of 330 m to 624 m by 2017.

A prefeasibility study is being undertaken into the next envisaged extension – the Cut 9 project – which is seen as having the potential to extend the life of Jwaneng to 2030 and mine depth to 850 m.

Cut 10 is likely to be the last surface extension, after which the mine may go underground.

Jwaneng also has a 39-million ton tailings dump resource that has a lavish grade of 40 carats per 100 t of dump material.

It is probably the best uncelebrated diamond resource left in the world, Debswana GM projects, planning and technical services Steve Axcell says of Jwaneng's tailings dump.

"It's a little mine on its own," Bonyongo adds.

Jwaneng's recrush plant that currently treats the present tailings from the main treatment plant has not been there since the inception of the mine, so the tailings were deposited before the current, efficient recrush plant was installed.

Debswana is currently studying a modular tailings plant for the treatment of some of its coarse tailings.

Cut 8, the grade of which is 112 carats per 100 t, will keep Jwaneng's production steady at 10-million tons of ore a year through the diamond treatment plant and maintain the mine's status as the world's richest diamond mine by value.

Mining at Jwaneng is done in a series of cutbacks into the area that surrounds the kimberlite pipes. These cutbacks allow mining to continue at increasing depths. Cut 8 is the biggest of the cutbacks to take place at the Jwaneng mine.

Construction began in late 2009 and will have embraced earthworks, civils, piling, structural steel erection and electrical installation by the end of 2011.

The first phase of waste removal began early this year and will last until 2012, when 60-million tons will have been moved. Phase two will begin in 2011 and will ramp up to 110-million tons a year – which is three times the current rate of 40-million tons a year – by the end of 2016.

In total, Cut 8 will remove 658-million tons of overburden to allow the diamond miners to access 91-million tons of ore that will yield the 102-million carats of diamonds.

The waste stripping will directly affect existing parts of the mine, with some exiting buildings and infrastructure having to be moved or modified.

Cut 8 is different from other Jwaneng cuts because the operation will have to move three times more waste to get to the same volume of diamonds.

The number of people and amount of machinery being brought in from outside to remove waste material and mine the kimberlitic deposit is substantially more than previously required.

The fact that the waste profile is so huge will move Jwaneng towards the status of being one of the world's super pits.

Most of the large specialist contractors have mobilised to site and begun earthworks, civils, piling, structural steel and electrical installation.

While the project is 20% complete overall, only 3% of the overburden has been removed to date by JSE-listed contractor Basil Read.

Of the more than 1 600 Cut 8 contractors are on site, 87% are Botswana citizens and of the R1,2-billion contracts awarded, 51% have been to Botswana citizen-owned companies or Botswana based companies.

The output from the world's biggest producer is recovering after falling last year because of the global economic meltdown.

Botswana expects to produce 24-million carats of gems in 2010, 36% more than in 2009, Bloomberg reports.

A Debswana spokesperson reported at the time of going to press that the labour unrest and strike at the Diamond Trading Company (DTC) of Botswana was continuing, but without significantly impacting diamond sorting and marketing.

Management's offer of a 6% increase was met by a demand of 8% from the DTC strikers, who said to number 95% of the DTC staff.

Wow, that's a ton of moola from a company that had almost nothing left last year.... wish it would come the way of oranejmund...