Venetia will impact positively on investor confidence

27th June 2014 By: Carina Borralho

The Limpopo-based Venetia diamond expansion project, owned by diversified mining major Anglo American subsidiary De Beers, is a significant boost for the South African mining industry as a whole, as it signals both companies’ confidence in the future of the country, says mining consultancy The MSA Group.

“The Venetia expansion project will ensure that South Africa remains a major diamond producer beyond 2040, despite some other mines approaching the end of their operating lives,” says MSA principal consultant Mike Lynn.

While the openpit Venetia mine is South Africa’s largest diamond producer, contributing 40% of the country’s yearly diamond production, the operation is being transformed into an underground mine, as De Beers believes growth potential lies below the surface.

The process of creating an underground mine involves the development of shafts, declines and ring tunnels, which are done before mining gets under way, and can be time consuming and capital intensive. “The development of the Venetia underground mine started at the end of 2013 and is scheduled for completion in 2021, when underground mining operations are scheduled to start,” explains Lynn.

He adds that the process of converting a mine from being an openpit to an underground operation also requires a different suite of new mining equipment and the associated support equipment, which adds to the project’s significant capital requirement.

Lynn also highlights several challenges that can occur during such a transition.

“Technically, underground mining is a different process, compared with opencast mining, and the management team needs to ensure that mineworkers are adequately trained and equipped,” says Lynn.

As the De Beers group no longer operates any underground mines in South Africa, Lynn believes the mining major needs to reinvest in the skills required for this style of mining.

“These particular skills are available in South Africa, which, as a country with a rich mining history, has a wealth of experience in underground mining of kimberlite pipes,” says Lynn.

“The development of this project requires careful planning and management. As an environmental concern, the need for high levels of water may impact on the local water supply if not managed correctly,” says Lynn, adding that the mine has a dam adjacent to the Limpopo river, which fills during the wet season and supplies the mine during the dry season.

Lynn believes that De Beers’ vast experience in the mining industry will ensure careful management of the project and that every challenge will be tackled effectively. “De Beers has always considered not only the diamond industry as a whole but also the bigger picture, including the environment,” he says.

Meanwhile, Lynn adds that, while underground mining methods rely heavily on geotechnical information for planning, the actual mining process has always been the most educational in terms of identifying and overcoming challenges. “This learning experience has the potential to slow production at the beginning of a project’s life cycle.

“It helps to ensure that the underground project is developed and brought into production early enough so that any initial teething problems can be identified and dealt with,” says Lynn.

He highlights block or sublevel caving methods as one aspect of underground mining that could pose a challenge. “If the pipe becomes smaller at depth, there are limited areas to mine and if a particular area faces problems, production may be affected.”

Lynn further highlights that De Beers has always emphasised the need for equality among workers. “Besides their excellent safety record, De Beers has also been innovative in terms of employing several female drivers in ore and waste haulage. We look forward to seeing whether the company will employ these skilled women as underground drivers.”

Meanwhile, Lynn believes the Venetia project sends a clear message of confidence to the mining market. “With the effects of the global recession still being felt in many parts of the world, projects such as Venetia have the potential to drive investment into exploration and mine developments in South Africa.”

Lynn notes that, if the South African government can successfully leverage the mining industry and if the Mineral and Petroleum Resources Development Act Amendment Bill is structured to attract investors, then traditional sources of investment, such as junior exploration and midtier mining companies, will return, and the mining industry will continue to play a significant role in the development of South Africa’s economy.