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Johnson: ASM diamond sector a potential new source of supply for De Beers

03 may 2018

david_johnson_xx.jpgDe Beers recently said that it is planning to pilot a programme called GemFair that will create a “secure and transparent route” to market for ethically-sourced artisanal and small-scale mined (ASM) diamonds.

GemFair would partner with the Diamond Development Initiative (DDI) for the pilot, which would run in Sierra Leone where a number of artisanal mine sites are already participating in the DDI’s Maendeleo Diamond StandardsTM programme.

Group head of strategic communications David Johnson told Rough & Polished’s Mathew Nyaungwa in an exclusive interview that although it was still in the early stages, the programme had potential to considerably transform the ASM sector by improving working conditions and potentially open up a new source of supply for De Beers over the longer term.

He also talked about the group’s diamond blockchain initiative, environmental protection initiatives and the Venetia underground project, among other things.

Below are excerpts from the interview.

What are the latest innovations offered by the company to the diamond industry, including new technologies, startups or solutions?

As an industry leader, De Beers is constantly seeking to identify and develop new opportunities that benefit and support the continued sustainability of our business, our producer country partners and the diamond industry more broadly.

In addition to the diamond blockchain initiative, we are very excited about our groundbreaking research programme to investigate the potential for carbon-neutral mining across our operations within five to 10 years. The project is assessing the potential of kimberlite tailings at our mining sites to safely and securely store very large volumes of carbon through a process known as mineral carbonation. This project could have significant applications for the broader mining industry, as the ideal carbon storage characteristics of kimberlite rock are also found in rocks mined for other commodities, such as nickel and platinum.

We’ve also just announced an initiative that aims to support the formalisation of the artisanal and small-scale (ASM) diamond sector, by creating a secure and transparent route to market for ethically-sourced ASM production. The initiative is called GemFair and we’re partnering with a leading NGO in the ASM space, Diamond Development Initiative, to undertake a pilot in Sierra Leone this year. While still in the early stages, this programme has the potential to significantly transform the ASM sector by improving working conditions and livelihoods, while also potentially opening up a new source of supply for De Beers over the longer term.

Finally, the partnership we announced with UN Women in September last year is focused on empowering women in our diamond producing countries, accelerating the advancement of women across our organisation and supporting gender equality in our marketing campaigns. The partnership includes a $3 million, three-year investment to advance the prospects of women and girls in each of our diamond producing countries of Botswana, Canada, Namibia and South Africa by addressing key priority areas.

Why is it important for De Beers to invest in a new platform that tracks diamonds throughout the value chain, using blockchain technology?

A diamond is purchased to represent some of life’s most important moments. As consumer expectations evolve, with a greater desire for uniqueness and authenticity, the ability to record a diamond’s individual story, and guaranteeing it is natural and responsibly produced, will be increasingly important in underpinning confidence in diamonds.

Blockchain provides a new, highly secure technology platform that has the potential to bring together all stages of the diamond value chain into one tamper-proof, digital ledger that holds a single record of every diamond that is registered.

We believe this technology will deliver significant benefits for all stakeholders, delivering enhanced consumer and industry confidence in diamonds and the diamond industry, as well as creating new efficiencies in the value chain.

De Beers is seeking expressions of interest from potential buyers for its Voorspoed mine in Free State, South Africa. What else motivated the need to place Voorspoed on the market apart from providing an opportunity for responsible lower-cost operators to employ a different operating model that could potentially extend the mine’s operating life beyond 2020?

The reasons for seeking expressions of interest from potential buyers for Voorspoed mine were outlined in the press release on 27 November, but chief among these was the desire to maximise the mine’s economic contribution to the community and employees.

How far have you gone with your Venetia underground project in South Africa and when do you expect to switch from open cast mining?

Good progress continues to be made on the Venetia Underground Project. It is expected to become the mine’s principal source of production during 2023 and will extend the life of Venetia mine to the mid-2040s.

You had challenges in South Africa as the government refused to award you with new exploration licences. Can you provide an update on this development?

The Department of Mineral Resources (DMR) has now approved 23 prospecting licence applications submitted by De Beers South Africa. The licences are all in the Free State, Limpopo and Northern Cape Provinces. We remain hopeful that the remaining 31 prospecting licence applications will also be approved. We believe South Africa remains highly prospective and we hope it will remain a key focus of our exploration activities in the future.

Some reports attributed a De Beers official as saying that the group is interested in Zimbabwe and DRC diamond exploration. Can you confirm if this is part of your plans?

De Beers has no plans to undertake prospecting activities in Zimbabwe or the Democratic Republic of Congo. Our exploration focus remains on those countries where we have well established operations – Botswana, Canada, Namibia and South Africa.

What is your projected output and outlook for the diamond industry this year?

Improving global macro-economic conditions remain supportive of continued consumer demand growth for diamonds in 2018. Growth will be dependent on a number of factors, including extent of the increase in consumer spending from US tax cuts, strength of the dollar on consumer demand in other countries, and how successfully China manages its adjustment to a more domestic consumer-driven economy. Group-wide diamond production is expected to be in the range of 34 to 36 million carats, subject to trading conditions.

What is the extent of De Beers' Corporate Social Responsibility in terms of environmental protection and improving social well-being in the countries where you operate?

Today, more than ever, every business is expected to operate responsibly – it is part of being a good corporate citizen. But, for De Beers Group, it is more than that. Doing the right thing has long been a business imperative – for three main reasons. First, there is a powerful mutual interest in all our working partnerships. We rely on access to our partners’ natural resources, and our partner countries rely on our ability to build revenue and create socio-economic benefit for their communities.

Second, when our host countries prosper, we benefit as well. Their prosperity creates a more predictable environment to invest in, an effective supply chain and a robust infrastructure. And, third, consumers must be able to trust a diamond from De Beers Group: after all, consumer demand is our principal source of value.

We must therefore work to maintain the support of our partners, to be in a position to help them prosper and to ensure our consumers are proud of their diamond jewellery. That means doing everything we can to make certain that all our activities leave a positive and lasting legacy, long after our mines close.

As such, we seek to fully embed our commitment to acting responsibly in our business – examples include the socio-economic benefits of our partnerships with countries such as Botswana and Namibia; our stewardship of numerous endangered and at-risk species on the conservation areas we run; and establishing sustainable programmes such as our partnership with UN Women, or our project to capture carbon gases from the atmosphere in kimberlite rock.

De Beers has made significant contributions towards sustainable development in countries it has operations. Are you under pressure to do more towards sustainable development in these countries?

Every business is expected to do the right thing; however, De Beers is committed to doing more than just the right thing. We understand that we have a responsibility to make a positive, lasting contribution to the communities and countries in which we operate, long after our diamond mines close – we call this Building Forever.

We work closely with governments and a range of other partners and stakeholders to ensure our programmes address local priorities and support the long term sustainable development needs of the communities and countries where we operate.

We seek to adopt the objectives of our producer partners as our own and embed them in our activities, as this helps strengthen these valuable partnerships on which the progress of our business, and the communities around our operations, relies.

Mathew Nyaungwa, Editor in Chief of the African Bureau, Rough&Polished