De Beers, the world's largest rough diamond producer by value, said Tuesday it had decided to proceed with the closure and rehabilitation of its Voorspoed diamond mine in South Africa.
The Anglo American unit said the move followed an extensive disposal process, which involved a rigorous due diligence exercise on the bidders to acquire Voorspoed.
The plan was that an operator with a lower cost structure or a different mining approach would be able to take over and extend the mine's life to 2020. Voorspoed was opened by De Beers in 2008 with a proposed 10-year life of mine.
De Beers will run a 30-day search to find an operator able to take over Voorspoed, in a last effort to save the mine.The company, however, concluded there were no suitable potential buyers - an operator capable of exhibiting a record of success technically, financially, and socially to sustainably operate the mine, located in Kroonstad, Free State.
"We have reluctantly taken the decision to close the operation, in a responsible manner, as it is no longer economically viable for De Beers Consolidated Mines (DBCM) to operate the mine," Phillip Barton, DBCM chief executive officer, said in the statement.
"We do not underestimate the impact this will have on Voorspoed Mine's employees and we have put in place appropriate support structures," he noted.
In light of the imminent job losses, South Africa's Department of Mineral Resources (DMR) has asked DBCM to throw a lifeline to Voorspoed by running a process parallel through which the company would strive to find an operator capable of purchasing the 700,000-carats-a-year operation.
As a result, De Beers will run a 30-day search, to be kicked off August 1, in its last effort to save Voorspoed.
Diamond exploration in South Africa is at multi-decade lows due to increasing red-tape in the granting of prospecting licenses. De Beers itself, which will be down to a single mine in South Africa after the closure of Voorspoed, has 54 exploration applications stuck with the Department of Mineral Resources, some for two years.
The company is currently spending $2 billion on its last South Africa asset, the Venetia underground project, which will extend the life of the mine, in Limpopo Province to 2040's.
Voorspoed, one of South Africa's largest diamond mines, is not the only operation De Beers is planning to close. In November, the company announced it was shutting its Victor mine, the first and only commercial diamond operation in the Canadian province of Ontario, in early 2019.
De Beers is also said to have decided to close four mines in Namibia by 2022, Mineworkers Union of Namibia Oranjemund branch chairman, Mbidhi Shavuka, told The Namibian Sun (subs. required) last year.