News Flash: Diamonds NOT Forever

Telegraph | Money | DeBeers closes down historic African mine with 1,000 jobs lost:
"DeBeers closes down historic African mine with 1,000 jobs lost
By Malcolm Moore (Filed: 26/07/2005)

The Kimberley diamond mine in South Africa, which has been open for 134 years, will close with the loss of around 1,000 jobs, DeBeers said yesterday.

'The mines are exhausted. We are already in a period of consultation, which will lead to closure,' said Gary Ralfe, managing director of DeBeers. 'When we close the loss-making underground mines, sadly with the loss of 1,000 jobs, then we should have a profitable unit in Kimberley,' he added.

DeBeers, which is 45pc owned by Anglo American, is based in Kimberley. The company was founded by Cecil Rhodes in 1888 to mine the 'Big Hole', a 215m pit in the middle of Kimberley town centre.

At the height of the diamond rush, Kimberley was said to be the home of more millionaires per square foot than anywhere else on earth. The Kimberley mines eventually descended to 800m, and employed 30,000.

DeBeers posted an 8pc rise in first-half diamond sales to $3.2billion (?1.86billion), and said it would not raise prices again until later in the year to reduce its stockpiles. It said it would contribute $270m to Anglo American's first-half profit.

It said production was up to 23.7m carats, a 23pc increase over the first half of 2004. As a result, stock levels are up by $400m.

'By the end of the year, we should have a stockpile that is no larger than the stockpile we had at the end of last year,' said Mr Ralfe. 'The increases so far came from Debswana,' he added, referring to the group's mine in Botswana.

He also said the group was planning to close or sell its Koffiefontein mine near Johannesburg, and will close its Oaks mine in two years' time. DeBeers intends to focus on getting its Cullinan mine into profit.

It has also approved the financing for its first mine outside Africa. DeBeers will spend $636m on the Snap Lake project in the Northwest territories of Canada.

Snap Lake, which will begin production in 2007, is expected to yield 1.5m carats a year for around 20 years.

18 July 2005: Diamond dealers attack De Beers' supply strategy

Cecil Rhodoes, where are you now that we need you?