De Beers considers closing Canadian mine

December 4, 2015, 1:50pm

By Allan Seccombe, Business Day Live. Photo: Supplied

DE BEERS, the world’s largest producer of rough diamonds by value, is considering closing its high-cost Snap Lake mine in Canada.

The 1.2-million carats a year underground mine in northern Canada came into production in 2008 and was, according to De Beers, its first mine outside Africa. The mine has cost De Beers about $2bn.

De Beers, which is 85% owned by Anglo American, was considering a number of options for the future of the mine, one of which was closing or putting it into care and maintenance, Reuters reported.

The mine’s inability to make a profit since it came into production has been compounded by groundwater problems, Reuters said.

"Any time these scenarios come forward, where the cycle is challenging, everything’s on the table and everything’s looked at, including the option of what would we do if we had to go into any kind of a care and maintenance or closure situation," De Beers spokesman Tom Ormsby said. "Nothing’s off the table."

De Beers will bring its new 51%-owned Gahcho Kue mine in Canada into production next year and it operates the Victor diamond mine in that country.

De Beers has scaled back its diamond output forecast this year to about 29-million carats from up to 34-million carats because of the difficulties in an oversupplied diamond market. It has made a number of cuts in prices of its rough diamonds and is investing tens of millions of dollars over and above its annual advertising budget of $100m to generate good sales in the US between now and Christmas, a period when about a third of the world’s diamond jewellery is bought.

De Beers is also targeting China in its advertising campaign.