PERTH (ResourceInvestor.com) -- De Beers Group, the world's biggest diamond miner, has decided to get out of direct exploration in Australia after having spent the past 40 years looking for commercial success downunder.
Over that time it has ploughed more than $A300 million into exploration and is estimated to have found at least half the kimberlite and lamproite pipes and fissures in Australia - with none of them having reached the mining giant's high development parameters.
Two of its more significant finds were Timber Creek in the Northern Territory (NT) which was sold to junior explorer Tawana Resources NL, and the Seppelt pipes in the North Kimberleys of Western Australia (WA), now advanced testing targets for durable Perth diamond seeker Striker Resources NL.
De Beers has built up one of the most sophisticated diamond assessment laboratories in the world in the Melbourne suburb of Richmond and will retain an operating base at its exploration office in the Perth suburb of Midland.
Over the past 40 years it has had two major misses:
- it walked over the Argyle region but, through its modelling and then blinkers for kimberlite pipes on its predominant southern Africa experience, it missed the world's biggest diamond deposit - Argyle's AK1 lamproite pipe, now a mature operation owned by Rio Tinto Ltd. This miss would have caused shockwaves in De Beers' boardroom in Kimberley, South Africa. Argyle, despite its low ratio of gem quality diamonds, turned the then global diamond market on its ear. It is still producing about 20% of the world's diamonds and is critical to the Indian diamond cutting industry where its smalls and near-gem stones provide employment for about 300,000.
- In the late 1990s De Beers attempted to take over Melbourne-based Ashton Mining Ltd which owned 40.1% of the Argyle mine (as well as the then operating Merlin diamond project in the NT) but was beaten in a corporate wrestling match with Rio Tinto, now 100% owner of the mine.
Subsidiary De Beers Australia Exploration (DBAE) has been scaling back its direct exploration in recent years and has just decided to exit prospecting in the NT and the Kimberleys of WA, but will retain some joint ventures.
It's prime focus is now in the West Pilbara of WA where it has a large holding and also a joint venture with Helix Resources NL to earn a 51% stake purely for diamonds in the WA explorers' ground.
The West Pilbara is part of the cold cratons where overlaying granite and other hard rocks would have prevented erosion of kimberlite or lamproite pipes, a quest De Beers has pursued with quiet vigour in recent years, with the luckless and now financially wracked Joseph Gutnick trying to follow suite with Astro Mining NL, both in the Pilbara and the Eastern Goldfields of WA.
As in South Africa and WA's Kimberleys many of the diamondiferous pipes were found to be nothing more than root systems of originally large pipes that eroded over the eons.
DBAE'S exploration manager (Australia-Asia), Stuart Vercoe, told Resource Investor that the scaling back decision followed an assessment of current projects in Australia in the context of a comprehensive review of the De Beers Group's global exploration activities.
"While we still see Australia as prospective for diamonds, it is our assessment that our strategy must change from the current direct investment focus to partnering and that our direct investment should be directed towards other parts of the world," Vercoe said.
The Victorian laboratory will continue operating, joint ventures will continue and De Beers will continue to make its data base and technology available to select Australian junior explorers - one being Thundelarra Exploration Ltd which is using De Beers' airborne Hyperspectral survey system, designed to locate minerals associated with kimberlites, over the Chamberlain project it acquired from Rio Tinto. Hyperspectral has, according to Thundelarra's Phil Crabb, picked up 12 new "high priority" targets on Chamberlain.
Vercoe emphasised: "We remain interested in Australia. "Our plan is to focus on identifying and investigating new business opportunities through partnership with others, utilising our current portfolio of exploration projects, joint ventures, tenements and data."
De Beers backpedalling in Australia has been evident for some time but what will be interesting is what use can be made of the company's massive taxation losses in Australia. At one stage last year there was speculation that De Beers might put some of its tax losses to use to do a deal with Kimberley Diamond Co NL on its Ellendale diamond project in the West Kimberleys. However, it may be that the tightening regulations of the Australian Taxation Office may see tax losses only applicable in exploration terms to the individual properties, not to the corporation.
Meanwhile overall staff numbers for DBAE will be reduced to about 20 during the course of this year.