De Beers believes partnership strategy lays foundation for prosperity and growth

De Beers has outlined the success it has achieved in laying a foundation for future growth in the company and in producing countries where it operated. Addressing the Mining Indaba in Cape Town this week, Gareth Penny, Group Managing Director, emphasised that De Beers had remained focussed on core assets, and most importantly had successfully cemented and established a large number of partnerships in the key diamond producing countries. These partnerships existed in both exploration and mining, and recently in sorting and marketing to support local diamond beneficiation. Penny said: “Prosperity through partnership – the theme of this conference is a vision we share, and is a reality for us.  We are involved in healthy partnerships across the diamond pipeline from our suppliers to our customers.  In addition, we recognise the importance of our communities and our employees.  Africa remains the source of the majority of the world’s diamonds.  Today, De Beers is a reinvigorated company with some of the most talented exploration, mining and marketing people in the world who, following a wide reorganisation of the company priorities, are empowered to lead in their clear areas of accountability with the mission to unlock the full value of our company’s leadership position across the diamond pipeline …in a safe and sustainable way.”

He commented that De Beers continued to spend $100 million a year on exploration in the regions where the company expected to make the most impact, and had invested more than this in the past few years to establish a greater presence and activity rate in Angola and the DRC. The company currently has partnerships in 59 Joint Ventures with 42 partner companies worldwide. He commented that: “The successes achieved in using both in-house and available technology had resulted in the discovery of another 45 new kimberlites in 2007. These new discoveries form a part of the portfolio of properties De Beers has at varying levels of evaluation.” As an example of  such a discovery coming to account he confirmed that the partnership in the Boteti with African Diamonds in Botswana (known as AK06) had submitted an application to mine a 10 ha kimberlite, with a grade of 22 ct/100t at an approximate value of $131/ct.

In South Africa De Beers Consolidated Mines, had succeeded in obtaining its licence conversion to New Order Mining Right for the Voorspoed mine in the Free State which is currently under construction, and for Cullinan diamond mine in Gauteng. He announced that the company had been notified this week that a New Order Mining Right licence had been agreed for the countries largest mine Venetia, in Limpopo Province. “I am delighted that we are getting our license applications approved and that Venetia has been granted its New Order Right. We have also received licenses for exploration and reconnaissance work in South Africa. In the last few months we have carried out reconnaissance as the initial stage of exploration in parts of the Free State. At this point in time we are not in a position to release details on that program as it is at a very early stage.” De Beers has two new mines in South Africa, the marine operation using the Peace in Africa mining vessel which was converted and fitted in Cape Town, and the Voorspoed mine which is expected to produce 1 Mct/y once in full production in 2009.

De Beers has also successfully furthered the transformation program in South Africa by selling a number of mines that no longer have a strategic fit in its portfolio to consortiums with wide BEE, gender and community credentials.

Turning to the other end of the value chain Gareth said: “The deep partnership the company has developed with successive governments in Botswana since establishing Debswana in 1969 has evolved beyond mining.  De Beers, in a 50/50 joint venture with the Government of Botswana are relocating most of the sorting and valuation of De Beers production from London to Gaborone thereby establishing sales and marketing activities in Botswana as part of the DTC.”  In a move to enhance the benefits diamonds bring to communities beyond those derived from mining Penny said: “DTC South Africa has relocated their diamond sights (sales of rough diamonds to the leading cutters) from Johannesburg to Kimberley in the Northern Cape. We have also assisted in establishing the State Diamond Trader in support of the government’s beneficiation initiatives. By 2009 over $1billion of rough diamonds will be supplied to the growing diamond cutting industries in southern African.”

He concluded by emphasising that De Beers, was today focussed on ‘driving value’ for its key stakeholders in all areas it operated in, from exploration to jewellery, in a way that aligned De Beers business priorities with national priorities in the countries where it worked.