De Beers Sells Stake in Gem Trading Business to Ponahola Holdings
South Africa’s largest diamond producer De Beers Consolidated Mines (DCBM) has sold a 26 percent stake in its local sales unit to black empowerment group Ponahola Holdings Ltd.
The move has been made just months before the government deadline to compensate for disadvantages caused by the apartheid system, although reports suggest the deal has been in the making for some eight years.
Ponahola acquired a 26 percent stake in DBCM for R3.7bn eight years ago and the new deal means it now has a stake in De Beers Sightholder Sales South Africa, the diamond sorting and valuation business, which holds 10 sales events a year known as sights.
It also means that De Beers has fulfilled its Mining Charter commitment to black economically empower both its mining and marketing operations.
DBCM’s largest diamond mine Venetia produces 40 percent of the country’s annual production and its other mine Voorspoed, one of the country’s newest mines is an occasional source of large and exotic coloured diamonds.
The company also helps to manage the Big Hole at Kimberly a major tourist attraction in the area and has a total of 1,007,676 hectares under licence.
Anglo American Plc owns 85 percent of De Beers after it bought the Oppenheimer family’s 40 percent stake in 2012 for $5.1 billion. Botswana controls the rest of the business, which was founded more than 120 years ago.
Low carbon world needs $1.7trn in mining investment
According to a new report from consultancy Wood Mackenzie, mining companies need to invest nearly $1.7trn in the next 15 years to help supply enough copper, cobalt, nickel and other metals needed for the shift to a low carbon world.
Cutting carbon emissions
The United States, Britain, Japan, Canada and others raised their targets on cutting carbon emissions to halt global warming at a summit in April hosted by US President Joe Biden.
Meeting those targets will need large-scale deployment of electric vehicles, storage for power generated from renewables and electricity transmission, all of which require industrial materials, such as lightweight aluminium and metals used in batteries such as cobalt and lithium.
Wood Mackenzie analyst Julian Kettle calculated miners needed to invest about $1.7trn during the next 15 years to “deliver a two-degree pathway - where the rise in global temperatures since pre-industrial times is limited to 2°C”.
“At an industry level, there seems to be reticence around investing sufficient capital to develop future supply at the pace and scale demanded by the energy transition (ET),” he said.
Mining firms are wary of making heavy investments after their experience of the last decade when they invested in new capacity just as demand peaked, leading to a collapse in prices and revenues. They also need to please investors, who are unlikely to want to see dividends diverted to capital spending.
Rising demands of investors related environment, social and governance (ESG) issues further add to the challenge.
Australia, Canada and Western Europe carry a low ESG risk but some of the best resources are in high-risk areas, such as Democratic Republic of Congo, which sits on about half the world’s cobalt reserves according to the U.S. Geological Survey. “Given the need to meet tough decarbonisation and ESG targets, Western governments, lenders, investors and consumers will need to get comfortable operating in jurisdictions where ESG issues are more complex,” Kettle said.
Kettle said government support was needed to help miners comply with ESG issues to ensure production from high-risk areas was conducted in an acceptable way to consumers.
“Then, and only then, will the West be able to secure sufficient volumes of the raw materials needed to pursue the energy transition in the timescales envisaged.”