Petra insists challenging illegal mining not an output threat

Illegal miners inside a mine security fence.

DEALING with the illegal miners operating on surface on mining rights belonging to Petra Diamond’s Kimberley Ekapa Mining (KEM) joint venture “… remains a challenge but they have not affected our production,” said Petra CEO, Johan Dippenaar.

Petra today published a trading update for the six months to end-December which reported a 24% jump in production to 2 million carats (six months to end-December 2015 – 1.63m carats) and guided that the group remained on track to deliver production of between 4.4 million and 4.6 million carats for the year to end-June.

Attributable production from KEM was 432,174 carats compared with 84,358 carats in the previous comparable six months which were recovered only from the Kimberley underground mine. KEM was created through the merger of the Kimberley mine with the surface operations formerly owned by De Beers around Kimberley.

In September last year it was reported that more than 1,000 illegal miners were operating on parts of the 6,000 hectares of mining rights now owned by KEM.

KEM CEO, Jan Hohne, said the illegal miners had carried out “life threatening” intimidation of his staff as well bouts of arson, widespread theft of equipment and malicious damage to property.

Hohne said at the time KEM was in constant communication with the South African Police Service (SAPS) and the Department of Mineral Resources and pointed out that De Beers had laid charges with the police during the previous two years.

He added: “… the SAPS has supported us in dealing with situations where our workers have been threatened but we are disappointed no further action has been taken to uphold the law”.

Dippenaar said Petra had been “going through the legal process” since then and added that “it would be helpful if there was firmer action from the authorities”.

The trading update revealed two particular problem areas – a possible delay in the commissioning of the new treatment plant at Cullinan and a production shortfall at the Koffiefontein mine. Dippenaar said these would not affect the overall production guidance although this might come in at the bottom of the predicted range.

Throughput at the new Cullinan plant in the second half could be between 1 million tonnes (Mt) and 1.5Mt of ore instead of the forecast 1.6Mt because of commissioning delays caused by “labour-related disruptions over the last six weeks” which have affected the contractors.

Dippenaar stressed there would be no production permanently lost from any delay in commissioning the plant because hoisting of ore from underground would progress as normal and untreated ore stockpiled.

“The new plant will have enormous excess milling capacity and will be able to treat the stockpiled ore in the first half of the 2018 financial year,” he said.

He confirmed Koffiefontein would not be able to catch up in the second half of financial 2017 on production lost in the first half, but said the shortfall in diamond output would be made up from greater production at the Kimberley and Williamson operations.

Petra shares were virtually unchanged in trading on the London Exchange following the release of the trading update dipping 0.26% to 155.8 pence.