Debeers anticipates positive outlook for 2018

02nd March 2018
Jwaneng Mine Source:The Midweek Sun


By Letty Masunga - Reporter

Jwaneng’s first ore from Cut-8 which was processed last year June is expected to become the mine’s main source of ore during 2018, enough to produce up to 91 million carats of diamond. Speaking at the recent Financial Overview for 2017 in Gaborone last week, the Executive Vice President of Global Sightholder Sales at DeBeers, Paul Rowley said the year is for the undertaking as they have set a production target of as high as 36-million carats for 2018. In its 2017 results announcement the Anglo American subsidiary reported a production guidance of 34-million carats to 36-million carats, which compares with 33.45-million carats produced in 2017. “Improving global macroeconomic conditions remain supportive of consumer demand growth for polished diamonds in 2018,” Rowley said, although it noted that the degree of global economic growth would be dependent on a number of factors, including the extent of the positive impact on consumer spending growth from US tax cuts.

The miner reported a two percent improvement in its underlying earnings before interest, taxes, depreciation, and amortisation (Ebitda) to $1.44-billion in 2017, despite a lower revenue of $5.8-billion following the one-off industry midstream restocking in 2016. This performance, the company noted, was driven by improved margins, which benefited from lower unit costs, which were supported by higher production and efficiency drives across the business, a strong contribution from Canada, and Element Six, which benefited from a recovery in oil and gas markets. However, this was partly offset by unfavourable exchange rates, and an increasing proportion of waste mining costs being expensed rather than capitalised, owing to an improved strip ratio at Venetia, in South Africa. Total revenue declined by four percent to $5.8-billion, with the average realised rough diamond price decreasing by 13 percent to $162/ct mainly owing to a lower value mix.

This was partly offset by an eight percent increase in consolidated sales volumes to 32.5-million carats. Capital expenditure reduced by 48 percent to $273-million, owing to the completion of major projects, including Gahcho Kué, in Canada, Debmarine Namibia’s new exploration and sampling vessel, the SS Nujoma; and planned lower waste capitalisation at Venetia. In terms of production, most regions registered positive margins of growth; Botswana (Debswana) increased production by 11 percent to 22.7-million carats, with production at Orapa being 28 percent higher, mainly driven by planned increases in plant performance and the ramp-up of Plant 1.

In Namibia (Namdeb Holdings), production increased by 15 percent to 1.8-million carats. At Namdeb’s land operations, production rose by six percent, despite challenging conditions, including grade variability owing to the nature of alluvial deposits, structural cost pressures, and some operations nearing the end of their lives. In South Africa, De Beers Consolidated Mines increased production by 23 percent to 5.2 million carats, primarily owing to Venetia. Construction continues on the Venetia Underground mine, which is expected to become the mine’s principal source of production during 2023.

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