Jwaneng underground to proceed, Vows De Beers CEO
Mbongeni Mguni | Monday May 20, 2024 17:56
De Beers’ CEO, Al Cook, told The Monitor the diamond giant was determined to deliver value for its stakeholders, who include partners in Botswana.
“The announcement regarding the separation between De Beers and Anglo American opens up new possibilities under new ownership,” he said in an emailed response on Thursday evening. “But some things will not change. “We will continue to deliver value for all our stakeholders, including our partners in Botswana. “This includes investing in the Jwaneng Underground Project, which De Beers and the Government of the Republic of Botswana visited together this week.”
Cook added that De Beers looks forward to finalising its “transformational agreement” with the government and “building a future even brighter than our past”.
Anglo-American last week announced plans to “divest or demerge” from its 85% shareholding in De Beers, signalling the desire to exit its equity holding in the diamond group after a relationship lasting nearly a century. The exit comes as Anglo refocuses itself on key assets such as copper while fighting off a takeover bid by the world’s biggest mining group, BHP.
BHP is due to make a third and final bid for Anglo this week after its first two proposals were rejected. Anglo’s board said the proposals significantly undervalued the group and involved complex unbundlings.
Anglo’s planned exit from De Beers threw into uncertainty key plans in the diamond group, including the funding of the Jwaneng underground project and the finalisation of the new 10-year sales agreement with the Government of Botswana.
Anglo and De Beers have both since assured of the finalisation of the agreement.
In a separate post on his social media, Cook provided details on the visit to Jwaneng with government officials.
“We came to see the dark ‘portal’ marked out in the rock face. “This portal will soon be removed to open up the multi-billion dollar Jwaneng Underground development. “This ‘King of Projects’ will provide the world with diamonds from Botswana for decades to come,” he wrote.
The underground expansion at Jwaneng Mine represents the future of diamond mining for Botswana and the biggest investment in supply De Beers is currently pursuing. It is also the country’s single biggest private-sector investment.
The expansion will create the world’s largest underground diamond involving 360 kilometres of tunnels which will bring up nine million carats to the surface, starting in 2034 and going up to at least 2054.
In January, De Beers and government announced that they had approved a $1 billion (P13.5 billion) budget to kickstart underground activities at the Jwaneng pit. At the time, Debswana chair and Permanent Secretary to the President, Emma Peloetletse, stressed the importance of the underground expansion for Botswana.
Debswana is the 50/50 joint venture between government and De Beers charged with mining more than 90% of the country’s diamonds.
“The future prosperity of Debswana hinges upon the progression of the Jwaneng Underground Project,” Peloetletse said. “With approximately 70% of Debswana's profits and distributions attributable to Jwaneng, extending its life of mine beyond 2033 is pivotal for sustaining contributions to the shareholders.”
Anglo’s replacement at De Beers will have to carry the lion’s share of the Jwaneng Underground expenses, implying the investor will carry out their own cost-benefit analysis on the project. Government, under the new sales agreement, will carry greater costs for the Jwaneng underground, than it did in previous expansions at the mine.