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De Beers sells mine to Black investors


The world’s largest diamond producer, De Beers, recently made headlines, after selling Jagersfontein-a South African mine that has been closed nearly 40 years-to a group of Black investors known as the Superkolong Consortium, a BEE (Black economic empowerment) holding company for a number of mining operations. All operations and assets at the mine have been turned over to the group in efforts to expand De Beers asset portfolio.

Some of the world’s largest diamonds-including a 995.2-carat stone known as the Excelsior-have been found at the Jagersfontein mine, which was in operation for 101 years before closing in 1971. It is located just south of Johannesburg and includes tailings dumps that can be reprocessed and a 13-million ton dump, which is expected to yield 12.8 carats per 100 tons. There is an estimated $125 million worth of diamonds in the dumps.

Superkolong had previously acquired tailings at Kimberley from De Beers in 2007, giving it a track record in this kind of operation. (Tailings are the materials left over after the process of separating the valuable fraction from the uneconomic fraction of an ore.)

The South African government has continuously urged companies to sell to Black investors and provide jobs for more Blacks to, at least partially, compensate for the discrimination endured during the apartheid era that concluded in 1994.

De Beers executives, including acting CEO Barend Peterson, believe working the mine will promote economic development in the area and also create opportunities for local entrepreneurs.
“I am very pleased to say that De Beers, with some determination to do the right thing, and taking the time necessary to engage with stakeholders affected by our business, has concluded another transaction to introduce miners with empowerment credentials to opportunities which have the potential to deliver significant returns for many. The impact, particularly at local government level, and in the provinces where economic development is so important to communities near mining resources, cannot be over-stated as development in the rural areas of South Africa can exponentially benefit the economy and therefore society. We hope that this deal will make a meaningful contribution to the community,” Petersen said in a statement.

According to a De Beers press release, a community trust, which will hold 10 percent equity ownership in the holding company of the acquired Jagersfontein assets, will also be established to fund community initiatives. This trust will receive R29 million (US$4.2 million) for projects and a further R30 million (US$4.3 million) over time.

The Superkolong Consortium has agreed to initially provide opportunities for the members of the Jagersfontein community.

South African operations of De Beers is 45 percent-owned by Anglo-American Plc., one of the world’s largest mining companies.