Both private and state-owned diamond mining companies in South Africa are reaping the benefits of the country’s rich mineralization deposits, with high productivity, shares and profits to show for it.
State-owned diamond miner Alexkor recently announced that for the first time in five years, the company has turned a profit as an upswing in global diamond markets in late 2010 has led to pre-recession diamond prices and trading levels.
According to MoneyWeb, South Africa’s diamond production rose about 7 million carats in 2010 from 4.8 million carats in 2009. Deputy Enterprises Minister Ben Dikobe Martins attributes one-third of the mining profits directly to new solutions that allow for lower operating costs and ultimately result in production increases. The next step, Alexkor Chairman Reginald Muzariri says, is to bring the mine up to a sustainable facility that would spur further mine development in the Northern Cape region.
But private companies are also seeing the sparkle of newly acquired profits due to improved processes.
According to Business Report, Petra Diamonds reported on Monday, September 19, that revenues had exceeded $220 million, up from the previously reported $163.7 million. Profits directly related to mining activities also rose from $67.2 million to $76.4 million.
The company focused on a new form of “value production,” which proved to translate to slightly less production than 2010, but because the price of diamonds rose from October 2010 to June 2011, it ended in higher profits.
But where Petra focused on value, Alexkor has been gearing toward sheer volume, MoneyWeb states.
According to Mining Weekly, the company plans to expand its operations beyond Alexander Bay, but will remain in the Northern Cape and other parts of Southern Africa due to the region’s high mineral deposits. Muzariri told the news provider that the company is now deciding on 24 different expansion opportunities that will strive to take advantage of an improving diamond industry.
Diamond mining has seen several advancements and consolidations in recent years that have led Petra Diamonds CEO Johan Dippenaar to believe more expansion is on the way.
“We have a high quality portfolio of production assets and expansion plans underway which will drive our exceptional growth profile,” he said. “The fundamentals of our industry are strong, while the global supply of diamonds remains constrained, demand continues to rise in both established and new markets.”
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