As South Africa celebrates a generation of freedom, Anglo American acknowledges its deep roots in the country and looks ahead to its contribution in the next 25 years and beyond. Over the next five weeks experience 25 Reasons to Believe with City Press as we explore the economy, job creation, enterprise development, health, land reform, sustainability, technology and – most important of all – communities.
Anglo American is investing in South Africa, and a multibillion-rand investment to extend the life of Venetia underground mine in Limpopo is testament to its long-term view. Eugene Goddard talks to Mpumi Zikalala about the future of diamonds.
Much has changed in the mining of diamonds since Barney Barnato and Cecil John Rhodes reluctantly agreed to grow stronger by consolidating their claim collectives in 1888 in Kimberley. That partnership resulted in the formation of De Beers Group – a company that has changed dramatically from its randlord history of yesteryear.
But if there is one attribute that has embedded itself in the company’s character, it is the belief in progress through powerful partnerships. Distilled through several iterations, earlier this year it changed once more when its Canadian and South African assets were consolidated into a new corporate brand, De Beers Group Managed Operations.
Anglo American owns 85% of De Beers Group, with the remaining 15% held by the government of Botswana.
De Beers Group Managed Operations is headed by vibrant chemical engineer Mpumi Zikalala, who is only 40 years old and is a product of the company’s “grow your own timber” programme. Having received a bursary to study chemical engineering at Wits, she later joined De Beers as a graduate.
Zikalala is at the forefront of Anglo American’s biggest investment in South African mining – the R28 billion capital input that will extend the underground life of Venetia diamond mine in Limpopo. The mine’s current open-pit operations will continue until 2021, and the innovative underground operation is expected to produce diamonds well into the 2040s.
Talking about the headwinds they have faced in recent years, Zikalala is both frank and futuristic in her assessment of strength through consolidation.
“We remain committed to the country. We have learnt over 130 years of history that one can only grow bigger and better through partnerships,” she says.
“We believe that, as a country and as the mining industry, we need to continue driving for those partnerships that are ultimately aimed at getting into a good space from a holistic point of view.”
It is also De Beers Group’s expertise through experience, and always working towards knowing and learning all there is to know about one’s craft, that sustains it as a leader in its sector.
Having cut her teeth in the global diamond industry’s unofficial capital, Kimberley, Zikalala fondly talks of how the Northern Cape town still has that “diamond feel to it” – the same feeling she got when she visited Canada for the first time since her promotion earlier this year to managing director after the company’s consolidation into De Beers Group Managed Operations. A feeling that also permeates the new centre of South Africa’s diamond business in Limpopo.
De Beers Group’s Venetia is an open-pit mine that has been in operation since 1992. Venetia has become symbolic as a “game-changing” operation for De Beers Group, which was confirmed by the $2 billion (R28 billion) invested a few years ago into extending the mine’s operation underground.
“That’s unusual for the times we’re in. These days, there is not a lot of substantial investment going into developing underground mines. Most companies are looking at extending the life of their existing operations because new vertical operations are regarded as too costly and too risky.”
However, given its inflexible emphasis on the safety of its employees and on efficient exploration, coupled with a history rooted in rock-solid ability, De Beers Group decided to forge ahead with its Venetia underground project, a deep-level development that will extend the life of the mine beyond 2040.
With on-target work progressing smoothly, Venetia’s underground mine is expected to deliver its first carats as early as late 2021 – “definitely by 2022”, says Zikalala.
“Once we start getting our initial production from a carat volume perspective, we will continue to spend capital until we get to a full ramp-up level from a comprehensive capacity point of view. We will then continue to heavily invest in operations because, ultimately, it is all about getting the mine into a space where we will have fully commissioned all the different areas of it.”
Looking well ahead of time, Zikalala says it’s quite possible that the current development of underground mining at Venetia could extend the mine’s life even beyond 2025.
“But there is a lot that is happening and changing very fast in terms of FutureSmart Mining™ [Anglo American’s innovation-led approach to sustainable mining] and when we get to a mid-century time frame and there is still a resource left, we will consider how to proceed in an environmental and ethical manner befitting of the times.”
With so much talk about sustainability and safety dominating conversation about hoped-for future achievements, it’s also important to keep track of present milestones.
“It’s actually been very good so far,” Zikalala says. “We’re doing well with top-of-line development, sinking a production shaft from where our first carats will also be mined. From the production shaft, we have started with a services shaft that will get us closer to the kimberlite.”
Zikalala says that the production shaft has been sunk to 1 023m and is currently being fitted with loading boxes at 1 000m, as well as its deepest end point.
In addition, the services shaft has been sunk to a level of 1 000m, where station construction is in progress. The production shaft is expected to go into operation in February 2022, and the services shaft in February 2023.
Well before then, though, “the initial deadline will allow us to have access to our first carats in 2021”.
Zikalala reckons that, at the height of operation, Venetia’s underground mine will deliver about 4 million carats a year.
“It’s really about investing in the future of mining in this country – the bedrock of our economy. But it’s also an investment in underground mining at a time when it’s not really favoured by our peers.”
Though leading De Beers Group’s future commitment to South Africa, Zikalala also has her commitments to the company’s Canadian interests.
Zikalala reiterates how important it is to leave the comfort of her office and immerse herself in operations on the ground, even though De Beers Group’s mines are literally worlds apart.
When City Press spoke to Zikalala, she was about to depart on her second visit to Canada’s Northwest Territories, where, together with Mountain Province Diamonds, De Beers Group runs several outfits.
One of them is Gahcho Kué, a mine so remote that it’s described as a “fly-in fly-out operation”.
She says that, apart from the thrill of visiting terrain that’s completely different to what we’re used to in South Africa – temperatures can easily plummet to -30°C – she always feels like she’s really at home.
“They are true De Beers Group people, known for their sparkle and the energy and commitment they bring to putting safety first.
“Because of our business interests in Canada, we have to see how we’re doing abroad because it’s important for us to constantly strive towards sustaining our partnerships.”
While there, she will also visit the Chidliak resource they are looking into mining on Baffin Island in the far northwestern reaches of Nunavut.
“We know that the diamonds are there and we are looking at how we will mine it. But, because we are committed to smart mining techniques and technology, and because of the environmental sensitivity of this area, we are looking at going ahead with much precautionary preparation.”
She says this involves figuring out logistical aspects like ferrying mine workers back and forth into the Arctic Circle, “because safety is key to whatever we do”.
“Added to this is figuring out how we will get to the resource and how we will bring the mined product to the surface.
“Before we go ahead with actual mining, we need to be sure that we have checked all realities and potential incidentals from a predictive and preparatory point of view.”
Any breakthroughs made on any of the company’s sites, particularly in the all-important areas of safety and innovation, will be brought home – where Anglo American has committed to being a part of South Africa’s economic future for many years to come.