17 Sep 2013
South Africa’s Department of Public Enterprise (DPE) has annnounced the possibility of diversifying state-owned diamond miner, Alexkor into a potential coal and limestone mining venture.
If the plan gets implemented, the state-owned company will enter a Joint Venture (JV) with emerging black, women and youth-owned mining start-ups to develop operations that will help deliver part of the “60-million tons a year of coal” needed by another State-owned company, Eskom, Alexkor CEO, Percy Khoza said.
Eskom is expected to start experiencing short coal supply by 2018, prompting the state to move fast in order to avert energy crisis.
South Africa’s diamond manufacturing industry has faced structural decline in recent time. Diamond output in the country fell from 15-million carats in 2005 to about 7-million carats in 2012. Number of polishers have also declined from 3 000 to about 300, during the same period.
Public Enterprises Deputy Minister Bulelani Magwanishe in the Bain & Company Global Diamond Report 2013 said: “Even though the retail market for diamond products is showing signs of recovery, production is yet to return to pre-crisis levels. Total rough-diamond output increased by 4 percent in 2012 to 128 million carats, which is still below the pre-crisis peak of 176 million carats in 2006”.
He added that in its current form, Alexkor is not sustainable in the medium- to long-term” and, along with industry, needed to “adapt or die” as the diamond industry lagged.
“Ours (strategy) is not to reinforce Alexkor’s commercial bottom-line, but to secure the future of this country and to ensure that the sector is finally transformed,” Magwanishe explained.
While no JV agreements have been signed, Alexkor is targeting about ten-millions tons of coal a year within the next ten years.