By Alex MacDonald
CAPE TOWN--Petra Diamonds Ltd. (PDL.LN) is focused on developing
its portfolio of diamond mines in Africa rather than pursuing
acquisitions but keeps a close eye on opportunities given the
scarcity of large diamond deposits globally, the company's chief
executive said.
Diamond producers Rio Tinto PLC (RIO) and BHP Billiton Ltd.
(BHP) said last year they wanted to quit the diamond business, in
part because it has become harder to find large new deposits that
can be mined on a large scale.
BHP is selling its remaining diamond operations in Canada to
Harry Winston Diamond Corp. (HW.T) while Rio Tinto is looking for a
buyer for its portfolio of diamond assets, which includes stakes in
Canada's Diavik mine, Australia's Argyle mine, and Zimbabwe's
Murowa mine as well as the Bunder diamond project in India.
When asked whether Petra Diamonds would be interested in Rio
Tinto's assets, Johan Dippenaar said: "Because there are such few
mines, you always look to see what's available...[but] We are
Africa-based and it's much easier to do things here. We are focused
on our current portfolio of assets." Mr. Dippenaar was speaking to
Dow Jones Newswires on the sidelines of this week's Mining Indaba
conference in Cape Town.
Petra Diamonds has five key operating mines in South Africa, a
sixth mine in Tanzania and an exploration program in Botswana.
More than 90% of the world's diamonds come from 30 mines, he
said, and global diamond production has been falling steadily since
peaking at 177 million carats in 2005. Global rough diamond output
in 2012 is expected to be similar to the 124 million carats
produced in 2011, according to Bain & Co.
Mr. Dippenaar said he expects diamond prices will continue to
rise given the limited supply and growing demand from China and
India. Bain & Co estimates that supply will grow by an average
of 2.7% a year until 2020 while demand will grow at an average
5.9%.
Petra Diamonds is aiming to spend about $546 million to grow its
rough diamond production to an estimated 5 million carats in 2019
from an estimated 2.6 million carats in 2013. This would involve
processing 21.2 million metric tons of ore and tailings in 2019, up
from an estimated 16.9 million tons in 2013. In other words it
hopes to recover nearly twice as many diamonds in 2019 by only
processing 25% more tons of material than 2013.
Write to Alex MacDonald at alex.macdonald@dowjones.com
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