De Beers Achieves First Production from New South African Underground Mine

The mine in question is De Beers’ Venetia operation in Limpopo, which has undergone a transformation from an open pit mine to an underground facility.

After over 30 years of open pit operations at Venetia, they were discontinued in December 2022. The construction of the underground section, which commenced in 2012 with an investment of $2.2 billion, represents the largest investment in South Africa’s diamond sector in decades. The project is currently 70% complete and has recently achieved its first production milestone.

According to a statement from De Beers, a unit of Anglo American, the newly established highly mechanized underground operation at Venetia is expected to yield up to seven million tonnes of kimberlite ore annually, resulting in the production of approximately 4.5 million to 5.5 million carats of diamonds each year.

With expectations for operation until at least 2046, the mine serves as a crucial economic lifeline for the Musina and Blouberg municipalities, providing employment opportunities to 4,300 people within its host communities.

Indeed, it is an exceptionally rare and groundbreaking occurrence within the South African mining sector – witnessing the delivery of first production from a new mine established by an established company. The transformation of the Venetia operation into an underground facility marks a momentous milestone in the industry’s history.

Over the past decades, investment and production in South Africa’s mining industry have faced a steady decline due to various challenges. Ill-conceived regulations, policy uncertainty, labor and social unrest, along with the broader issues of a struggling state—such as rampant crime, power shortages, and a collapsing rail network—have contributed to this downward trend. These formidable obstacles have impeded the industry’s growth and stability.

Since the implementation of the Mineral and Petroleum Resources Development Act in 2004, South Africa’s share of global exploration spending has steadily declined. This decline can be attributed to the introduction of the original Mining Charter, which included Broad-Based Black Economic Empowerment (BEE) and other targets that have been perceived as burdensome from an investment perspective. As a result, South Africa’s attractiveness as an exploration destination has diminished, leading to a reduction in its share of global exploration expenditures.

Currently, South Africa’s share of global exploration spending has plummeted to less than 1%, reflecting a range of contributing factors. One significant factor is the inefficiency of the Department of Minerals and Energy (DMRE) in replacing its outdated and ineffective Samrad system, which is responsible for processing mining rights applications, with a functional and modern mining cadastre. This failure has hindered the smooth and efficient allocation of mining rights, further exacerbating the country’s decline in global exploration investment.

As the tender process is currently underway, the announcement of the winning bidder is expected soon, with only a few days left in this month. However, without significant and meaningful exploration efforts, South Africa’s mining sector faces challenges in sustaining long-term production. This concern is supported by data from Stats SA, which clearly shows a continuous decline in output over the years. The need for renewed exploration efforts becomes increasingly critical for the industry’s future prospects.

The DMRE’s indecision has come at a considerable cost in terms of lost time. Mining is a long-term endeavor, as evidenced by De Beers’ recent announcement, which highlights the significance of strategic planning and decisive action in the industry.

The construction of the underground mine at Venetia started over a decade ago, in 2012, and despite the time that has passed, it is only 70% complete. The process of developing an ore body and transitioning to commercial production is a lengthy one, often spanning two decades or more from discovery to extraction.