Living up to diamonds - Operating and Financial Review 2007 From natural resources to shared national wealth - De Beers Group
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Living up to diamonds From natural resources to shared national wealth Operating and Financial Review 2007
About De Beers In this report questions raised at our quarterly
De Beers Société Anonyme 3.1 3.2 3.3 3.6 3.7 3.8 Diamond Dialogue roundtables
(DBsa – hereafter referred to as This report is designed to be read on how responsible investment in
De Beers) has three shareholders: alongside our Report to Society natural resources contributes to
Anglo American (45%), Central 2007. These reports form part of sustainable development in Africa.
Holdings (40% – representing our annual reporting cycle and
the Oppenheimer family) and the together cover the financial and Reporting standards
Government of the Republic of sustainability performance of the We believe this report together
Botswana (15%). It is the holding Family of Companies. This report with our Report to Society 2007
company of what is regarded as provides headline financial and represents an A+ application of
the De Beers group or “Family of operational statistics as well as an the Global Reporting Initiative
Companies” (p27). De Beers is overview of organisational change. (GRI) G3 Sustainability Reporting
managed and controlled from its It also provides insight into our Guidelines. It also forms part of
head office in Luxembourg. Its governance processes. Performance our Communication on Progress
commercial activities are carried out and operational statistics in this to the United Nations (UN) Global
by several associated subsidiaries report relate to the 2007 calendar Compact. Further detail is presented
and investments it finances in year unless otherwise stated. online at www.debeersgroup.com
different parts of the world.
This report responds to some of the Using icons
The Family of Companies is involved questions raised by our stakeholders
in most parts of the diamond value in 2007. This includes responses Icons are used throughout the report as
chain (p6-7). This includes exploring to the viewpoints of employees references to reporting standards, external
for new deposits on four continents identified during a Managers initiatives or sources of further information.
and industrial mining in Botswana, Perception Survey in 2007. It also
Canada, Namibia, South Africa includes answers to questions 1 Global Reporting Initiative indicators
and Tanzania. It also includes the raised by the Multi-Stakeholder 1 UN Global Compact principles
marketing of diamonds in 11 major Forum which commented on the 1 UN Millennium Development Goals
consumer markets. The Family of Report to Stakeholders 2005/6 and Policies or tools that support performance
Companies employs about 20 000 the Operating and Financial Review Relevant web content and resources
people around the world. 2006. This report also answers Relevant content elsewhere in this report
Our Purpose, Vision, Values and Principles framework1
The world of diamonds is about
making “dreams” come true. Geologists Our Values
dream about finding the next big mine,
nations dream about the jobs, wealth and Be Passionate Show We Care
We will be exhilarated The people whose
development opportunities that diamonds
by the product we sell, lives we touch, their
can bring, shareholders dream of superior
the challenges we face communities, nations
returns, employees dream of a successful and the opportunities and the environment
career and couples dream about the we create. we share, all matter
diamonds that symbolise their love deeply to us. We will
and commitment. always think through
the consequences of
Pull Together
Our Purpose Being united in purpose
what we do so that
our contribution to the
To turn diamond dreams into lasting reality. and action, we will turn the world is real, lasting
diversity of our people, and makes us proud.
Our Vision skills and experience into
an unparalleled source
Shape the Future
We have big dreams for our Family of of strength.
Companies – an ambitious growth vision We will find new ways.
focused on unlocking the full economic We will set demanding
targets and take both
value of our leadership position across
the diamond pipeline in a safe and
Build Trust tough decisions and
We will always listen considered risks to
sustainable manner. We will make it a reality achieve them. We will
first, then act with
by maximising the potential of our global openness, honesty and insist on executional
partnerships, the skills and commitment of integrity so that our excellence and reward
our people and the magic and emotional relationships flourish. those who deliver.
value of our product.
1
Our Principles are presented on p36-37
Operating and Financial Review 2007 1
Table of contents
Global Reporting UN Global Compact
Page Initiative indicators principles
Introduction from the Chairman 2
Performance overview from the Managing Director 4 1
Our global operations 6 2.2 2.5 2.7
Our role in the diamond value chain 7 2.3
Financial highlights 8 2.8
Consolidated income statement 10 2.8
Consolidated balance sheet 11 2.8
Cash flow information 11 2.8
Notes to tables 12
Exploration 14 2.9 LA7 1 7
Operating highlights 16 2.8 2.9
Debswana 18 2.9 EN8 EN16 LA7 1 7
Namdeb 19 2.9 EN8 EN16 LA7 1 7
De Beers Consolidated Mines 20 2.9 2.10 EN8 EN16 LA7 1 7
De Beers Canada 21 2.9 EN8 EN16 LA7 1 7
Williamson Diamonds 22 2.9 EN8 EN16 LA7 1 7
Diamond Trading Company 23 2.9
Diamdel 24 2.9
De Beers Diamond Jewellers 24 2.9
Element Six 25 2.9
Governance 26
De Beers Société Anonyme 26 2.1 2.3 2.4 2.6 3.6
Appointment of Board directors 28 4.2 4.3 4.4 4.7 4.10
Ethics and the Board 30 4.5 4.6
Structures under the Board 31 1.2 4.1 4.8 4.9
Risk management 33 1.2 4.9
Board and Board committee composition 34 4.1 2.3
Our Principles 36 4.8
Extended contacts 37 4.9
2
Introduction from the Chairman
Financial summary while representing a decrease Milestones, successes
Underlying earnings increased on 2006 figures (US$140 million) and challenges
14% to US$483 million (2006 reflects a narrowing of focus onto In Canada our operations moved
US$425 million), while EBITDA key target areas primarily in Angola from an exploration focus into a fully
(Earnings Before Interest, Taxes, and the Democratic Republic of integrated exploration and mining
Depreciation and Amortisation) Congo (DRC). venture. Our Canadian mines are our
remained steady as effective first outside of the African continent
cost management at the group’s Our approach and signify a notable milestone in
African mining operations offset the In 2007, we continued the our global development.
impact of slightly lower sales. Cash transformation of De Beers to ensure
available from operating activities that we maintain our leadership In southern Africa we launched the
rose by 4% to US$844 million. position in what has become a highly marine mining vessel Peace in
competitive and rapidly evolving Africa and saw the establishment
In 2007, we continued significant diamond industry. of unique joint ventures with
capital expansion programmes with government in both Namibia
investment of US$1.12 billion (2006: Our efforts have been further Diamond Trading Company (NDTC)
US$949 million) and accelerated the underlined by a number of and Diamond Trading Company
development of four key projects to significant asset sales in 2007. Botswana (DTCB). New projects
add profitable carats to De Beers in Mines that drove the early growth of were delivered on time and, most
2008 and beyond: South African Sea the company in the latter years of importantly, were completed without
Areas (SASA) and the Voorspoed the 19th and early 20th centuries are compromising our high standards of
mine in South Africa and the Snap now passing on to new ownership health and safety.
Lake and Victor mines in Canada. as De Beers continues to refine its
portfolio of mines and sharpen its Global increases in fuel costs
Our achievements in Canada were leadership role. Hand in hand with continue to exert pressure on
tempered by the decision of the the sale of older mines has been margins, and in southern Africa,
Board to impair US$965 million the development of new projects energy shortages have galvanised
against the value of our Canadian on both land and at sea. Similarly, the Family of Companies towards
assets. While a difficult decision, the progression of new initiatives implementing energy efficiencies.
particularly for our shareholders, now extends far downstream into
this was the right and prudent step the retail sphere through De Beers The prevalence of HIV/AIDS among
to take at this stage and reflects Diamond Jewellers (DBDJ). staff and their families is a huge
the effects of rising fuel costs, the challenge to the sustainability of all
current strength of the Canadian In every country and community businesses in southern Africa. We
dollar and higher than expected in which we operate our long continue to face the pandemic with
construction costs. history has taught us that the steely resolve and will endeavour
most prudent and sustainable to uphold the health, wellbeing
As we looked to further shape our commercial model is also the most and dignity of our employees and
future, we invested US$126 million in prudent and sustainable community families through the provision of
exploration projects globally, which, model. Diamond mining is a long free anti-retroviral treatment and the
term endeavour stretching over delivery of far-reaching awareness
decades or even centuries in some and prevention campaigns.
cases. Our ability to train and hire
local citizens, provide proactive The milestones achieved and
healthcare and preserve our working challenges managed in 2007 are
environment contributes to a stable concrete examples of the strength
and prosperous state, which in turn of our commitment to the future
protects and maximises our sizeable of diamonds, De Beers and most
investment. What makes this importantly to the individuals,
philosophy work – what drives it – is communities and nations that are
a belief in the power of partnership. integral parts of our operations.
Nicky Oppenheimer, Chairman, De Beers
Operating and Financial Review 2007 3
Sustainable development DTCB and NDTC will play a key role Transparency Initiative we are
through partnerships in supporting the development of determined that one of the world’s
We have a long history of sustainable downstream diamond most beautiful natural resources
conducting successful business industries in Botswana and Namibia. enables and enhances shared
in Africa. With our joint venture national wealth.
partners, the Family of Companies Accountability and living
employs more than 20 000 skilled up to diamonds Our approach in 2007
men and women, most of whom are A good reputation is difficult to and beyond
African. Our operating companies gain but all too easy to lose. As Three guiding principles define the
on the continent are all run by an industry whose offering to the way in which the De Beers Family
Africans and our management consumer symbolises the ultimate of Companies does business (p36).
teams increasingly reflect the racial gift of love, it is critical that we These principles are: “Sustainable
and gender diversity of the countries recognise the added responsibility development through partnership”,
in which our people live and work. that we as a collective have to the “Diamond dreams and development”
As part of our US$2.6 billion capital millions of people around the world and lastly “Accountability and living
investment programme we are who depend on the revenue from up to diamonds”. These principles
building new mines and reinvesting diamonds for their livelihoods and inform our understanding of what
in existing ones in Botswana, wellbeing of their families. is right and wrong, articulate what
Namibia and South Africa. is important to us and define
The impact on the economies and performance criteria for which we
During the past 10 years, the societies of those countries that rely are accountable. I invite you to read
Diamond Trading Company (DTC) on diamond revenues demands of our third Report to Society, available
has transferred expertise and us the highest ethical standards. at www.debeersgroup.com, to
technology to southern Africa to This is not only the right thing to do; determine whether you feel we are
ensure that all diamonds mined on it is the most economically sensible “living up to diamonds”.
the continent can be sorted on the approach. After all, the decision
continent to the full international to purchase a diamond remains Whether viewed from an exploration,
presentation assortment standard. completely at the discretion of the construction, production,
To assist this endeavour, De Beers consumer who has many alternative distribution, marketing or retail
has invested US$83 million in purchasing choices. perspective, 2007 was a remarkable
building the world’s largest and year. Along with my colleagues from
most sophisticated diamond sorting De Beers is committed towards across the Family of Companies
facility in Gaborone, Botswana. playing a leadership role both in our I look forward to 2008, our 120th
DTCB will be operated in a 50/50 own operations and in addressing year, invigorated as ever by the
joint venture with the Government of a number of matters of global challenges to be faced and
the Republic of Botswana. Similarly, concern. Whether it be through our confident in all that we will achieve.
in NDTC, a 50/50 joint venture with active involvement in the Kimberley
the Government of the Republic of Process, Diamond Development
Namibia has been established. Both Initiative or Extractive Industries
4
Performance overview from the Managing Director
The past year has seen from land and sea operations, competition in a transformed and
achievements across the Family and Debswana performed well vibrant diamond sector.
of Companies. Success was producing 33.6 million carats (2006:
attributable to the values, skills and 34.3 million carats) despite tyre Production outlook
ingenuity of our employees, whose shortages which impacted total In 2008, the Family of Companies
collective endeavour was exemplary. carat production. aims to offset the sale of the Cullinan
and Kimberley mines by maintaining
Safety in the workplace It is with significant pride that in profitable production at optimum
In line with production successes, 2007 we can formally report our levels. While challenged by power
further inroads have been made first diamond production outside shortages in South Africa, this will
in achieving heightened levels of of the African continent, with the be achieved through new production
operational safety. Notably, the Oaks commencement of mining at from the Snap Lake mine and our
mine in South Africa has worked Snap Lake mine in the Northwest new Victor mine in Ontario, Canada,
more than six years without a lost Territories, Canada. Snap Lake mine as well as through efficiencies
time injury. Our group safety record is an important part of our global and expansion projects at more
has seen the achievement of a 0.18 mining portfolio that over a 20 year established operations.
Lost Time Injury Frequency Rate life is forecast to yield in excess of
(LTIFR) (2006: 0.20). Despite these 24 million carats. Led by Jim Gowans, the Canadian
achievements, it is with sincere team is fully focused on bringing the
regret that I record the death of Responsible sale of assets two new mines into full production
colleague James Muhere in a fatal The year 2007 saw the entering in 2008 and improving the long term
incident at the Williamson mine in of agreements for the sale of economic returns of our Canadian
Tanzania on 19 August 2007. James’ the Cullinan mine, Kimberley operations. They are striving for
death is a stark reminder that we underground mines, a part of greater energy efficiency,
must redouble our efforts to rid the Kimberley’s tailings and Koffiefontein re-evaluating cost structures,
workplace of all fatalities. mine. While De Beers has had a focusing on increasing production
long and proud association with yields and studying the opportunities
Profitable production growth these operations, our departure for exploiting additional kimberlites
In 2007, the Family of Companies signals our clear intent to realise around the Victor mine.
maintained the remarkable capital from those mines we deem
production level of 51 million carats to be marginal and to focus energies Investment in the future
achieved in 2006. Production on higher return projects such as In 2007, De Beers further refined
from De Beers Consolidated the Voorspoed mine scheduled to its highly prospective exploration
Mines (DBCM) reached 15 million begin commissioning in 2008, and portfolio. Ground holdings were
carats (2006: 14.6 million carats), the SASA mining venture conducted reduced by 29.5% from
Namdeb again broke the 2 million by the marine mining vessel Peace 393 580km2 to 277 420km2 to allow
carat combined production mark in Africa. for an increased focus on advanced
exploration activities with an
Importantly, this strategy is not investment of US$126 million.
simply a “win” for De Beers. It is
viewed as a win for junior mining A total of 45 kimberlites were
houses and Black Economic discovered over the course of
Empowerment (BEE) groups who the year, the bulk of which were
have acquired some of the world’s situated in Angola and the DRC.
most established diamond mines. Testament to the exploration team’s
It is also a win for employees level of professionalism, the Boteti
and communities as it introduces Exploration Company (the joint
new partners with a proven venture between De Beers, African
ability to sustain such operations Diamonds plc and Wati Ventures)
and maximise the life of mine. filed for a mining licence for AK06, a
Furthermore, it is a win for South kimberlite with an estimated reserve
Africa, as it is consistent with of 11.1 million carats in the Orapa
the government’s aspirations for region of Botswana.
broadening BEE ownership and
Gareth Penny, Managing Director, De Beers
Operating and Financial Review 2007 5
Diamond sales Compliance and reputation Outlook
The DTC achieved sales of US$5.92 In March 2006, De Beers entered The outlook for 2008 is tempered
billion in 2007 (2006: US$6.15 into a preliminary agreement to by uncertainty over world market
billion) despite constraints in supply settle all class action law suits conditions, particularly in the United
principally a result of the planned in the United States. While not States, and concern over energy
gradual reduction of purchases from accepting the allegations, we do shortages in southern Africa.
Alrosa, the Russian Federation’s believe that settling the suits is in Nevertheless, strong demand for
state-owned diamond producer. the best interests of our clients, rough diamonds remains, especially
our shareholders and consumers. in the emerging markets and for
Demand for rough diamonds In 2007, US$295 million was paid larger high quality gems.
remained healthy through 2007 into an escrow account pending
following a weakening of the market conclusion of the settlement It is in these challenging times that
towards the end of 2006. In the process. The matter is proceeding I believe we have the opportunity
second half of 2007, the DTC according to the timetable of the to shape our future. Whether it be
increased prices in line with polished court and De Beers anticipates a through finding and developing
price growth. This policy has seen Fairness Hearing in early 2008. new mines, achieving even more
prices for higher-end rough boxes effective distribution of rough
rise in excess of the average for all The Court of First Instance in diamonds, finding more efficient
types of DTC rough diamonds. Luxembourg announced in July ways to operate as a Family of
2007 that it had annulled the Companies or developing innovative
Retail growth European Commission’s decision marketing initiatives such as
While the Chinese, Indian and to accept commitments offered by the FOREVERMARK, we remain
Gulf states continued to enjoy De Beers to cease all purchases dedicated to unlocking the full
double digit growth in diamond of rough diamonds from Alrosa economic value of our leadership
jewellery sales, estimates indicate from 1 January 2009. De Beers will position in the diamond business.
that in the United States sales continue to purchase goods from
underperformed the expectations Alrosa, up to the agreed levels
of analysts and retailers. The 2007 and within the proposed timeframe
holiday season in the United States set out in prior commitments, as
started well, however, consumers it analyses the full judgement to
reined in spending amid financial determine the implications for
concerns in the uncertain economic the company.
environment. The majority of large
and small chains reported lacklustre
sales figures. Three-stone rings,
Journey Diamond Jewellery and
diamond engagement rings were
reported to have maintained “best
seller” status.
De Beers Diamond Jewellers
(DBDJ) growth
Building on the significant growth
and sales successes achieved in
2006, DBDJ opened eight new
stores in 2007. DBDJ now has 23
locations globally and will continue
to grow aggressively in 2008, as the
retail venture seeks to secure some
of the world’s most sought after
retail locations.
6
Our global operations
Early stage exploration
Exploration office
R Reconnaissance
D D Discovery
De De Deposit
Re Re Resource
Value-adding activities
DTC DM Da Sorting and sales entities
7 DT Di Da Cutting and polishing
DT Di Da Marketing entities
DT Di Da DTC Sightholders
DT DTC
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 Di Diamdel
1 2 3 Da Diatrada
Independently managed bus
R exploration
Early stage D Legend DB De Beers Diamond Jewell
Exploration office Performance
R Reconnaissance Improved
E6 Element Six
Discovery
1
D D Stable 14
1
De De Deposit Declined 13 4
RResource
D De 18 3
Re Re Certification 6
Value-adding activities O OHSAS 18001 DTC DTC
2 5
DTC DM Da Sorting and sales entities ISO 14001 8
I
15 DM
DT Di Da Cutting and polishing
17 9 3
12
DT Di Da Marketing entities
R D * Tailings treatment
DT Di Da DTC Sightholders Owned and operated by independently 16 DTC
DTC De Re managed joint ventures
DT
19
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 Di Diamdel
E6 10
1 2 3 Da Diatrada
R
Independently managed businesess
DB De Beers Diamond Jewellers
E6 Element Six
11
R D De R
2
E6
DB
DB
DB DB
DB DM
DB
R
DM
DB
E6 DB
E6
DM
E6
E6
DB
DM
E6
DB
E6 DB E6
E6 DTC DM
E6
DB
E6
E6
E6
Operating and Financial Review 2007 7
7
Our role in the diamond value chain
Exploration
Exploration office1 R Reconnaissance2
Early stage exploration D Discovery
Advanced stage exploration De Deposit
Re Resource
Major projects Start of production End of production3
1 AK06 2010 2019
2 Victor I 2008 2020
3 Voorspoed 2009 2021
Mining Start of production End of production3
Open-pit
1 Damtshaa O I 2002 2021
2 Jwaneng O I 1982 2022
3 Letlhakane O I 1975 2012
4 Orapa O I 1971 2026
5 The Oaks O I 1998 2008
6 Venetia O I 1992 2018
7 Williamson O I 1940 2031
Underground
8 Cullinan O I 1902 2019
9 Finsch O I 1961 2015
10 Koffiefontein (sold in 2007) 1870 n/a
11 Snap Lake I 2007 2025
Tailings treatment
12 Kimberley4 O I 1871 2016
Alluvial
13 Contractors
14 Elizabeth Bay O I 1990 2013
15 Mining Area 1 O I 1936 2015
16 Namaqualand5 O I 1928 2013
17 Orange River O I 1989 2017
Marine
18 Namibian Sea Areas (Atlantic 1) O I 1990 2020
19 South African Sea Areas O I 2007 2025
Notes
O OHSAS 18001 Owned and operated by independently managed joint ventures
I ISO 14001
Value-adding activities
Sorting and sales6 DTC DTC DM Diamdel7 Marketing8
Cutting and polishing9 DTC clients (Sightholders)
Independently managed businesses
DB De Beers Diamond Jewellers10 E6 Element Six11
1
The Australian exploration office is intended for closure in 2009
2
The exploration process begins with reconnaissance and reaches its most advanced stage with the discovery of an economically viable resource
3
Relates to projected “base case” scenarios or licence expiry. Excludes underground mining options for open-pit operations
4
Underground work at Kimberley ceased in 2005
5
Namaqualand operations include open-cast and surf zone mining of large-scale alluvial diamond deposits
6
Sorting and sales in India is completed by Hindustan Diamond Company as an associated member of the Diamdel network
7
Diamdel is an independently managed business
8
Marketing is undertaken by DTC except in the United States where it is carried out by J. Walter Thompson (JWT)
9
Namgem is the only cutting and polishing entity in the Family of Companies. All other cutting and polishing is undertaken by DTC clients (Sightholders)
10
De Beers also has Japanese retail outlets in Kyoto, Kobe, Sogo and Hataka
11
Element Six also has offices in Sao Paulo, Brazil
8 8
Financial highlights
nderlying earnings increased
U eflecting strong confidence in
R Voices of stakeholders
14% to US$483 million (2006: the long term fundamentals of
US$425 million) while EBITDA the diamond market, the group
remained steady as effective cost invested US$1.12 billion in Growth in the future has to be in
management at our African mining expansion capital during 2007, investing in new mines
operations offset the impact of mainly for construction at the Snap
slightly lower sales which were Lake and Victor mines in Canada,
constrained by rough diamond and the Voorspoed mine and Source: Nicky Oppenheimer, Chairman,
supply to the DTC.1 South African Sea Areas (SASA) De Beers, Annual Results 2007
mining vessel in South Africa.
Figure 1: Financial summary Plans that we talked about before
are now being turned into action. DTC
Full year (US$ millions) is transforming itself in Botswana,
2007 2006 % change Namibia and South Africa; reflecting the
Total sales 6 836 7 030 (3) flexibility that we are bringing into the
business and the alignment with national
Underlying earnings 483 425 14 priorities
EBITDA 1 216 1 232 (1)
Cash available from operating activities 844 809 4
Source: Gareth Penny, Managing
Capital expenditure – expansion 1 120 949 18 Director, De Beers, Annual Results 2007
EBITDA (Earnings Before Interest, Taxes, Depreciation and Amortisation)
1Operating and Financial Review 2007 9
Business restructuring
Insight
• D
e Beers sold its 50% stake in Cullinan mine. Sale is expected to in support of local value-
Gope Exploration Company to the complete mid-2008. addition and the development of
Gem Diamond Mining Company sustainable downstream diamond
for US$17 million. • W
ith the significant increase in industries in Africa. They will
value of the Canadian dollar support a total of 27 companies
• T
he Koffiefontein mine in versus the US dollar, fuel, that purchase diamonds for
South Africa was sold to Petra labour and capital costs due to manufacturing in Botswana and
Diamonds Ltd (Petra) in July 2007 construction challenges at the Namibia. This follows a shift of
for R82 million (US$12 million). Snap Lake mine, the directors some of De Beers’ activities in
Petra also reached agreement believed it was prudent to make London to southern Africa.
to purchase the underground an impairment against the value
operations of Kimberley mines. of our Canadian assets of • D
e Beers has made its technical
US$965 million. expertise and assets available to
• In November 2007, agreement the Department of Minerals and
was reached to sell the Cullinan • N
DTC and DTCB have been Energy (DME) for three years to
mine to a Petra-led Black established. The new entities, facilitate the start up of the newly
Economic Empowerment (BEE) both 50/50 joint ventures with established State Diamond Trader
consortium for R1.03 billion their respective governments, (SDT) in South Africa. DBCM, like
(US$150 million). DBCM was will sort and value local diamond other producers, will sell up to
also granted conversion of production and perform local 10% of its production to the SDT.
its old order mining right for sales and marketing activities10 Financial highlights
Consolidated income statement
31 December 2007 (abridged) US$ millions
31 December 2007 31 December 2006
Diamond sales (Note 1) 6 422 6 626
Non-diamond sales 414 404
Total sales 6 836 7 030
Cost of sales 5 461 5 598
Gross profit 1 375 1 432
Deduct
Exploration, research and development 288 299
Sorting and marketing 339 328
Group technical services and corporate overheads 408 386
Operating profit (Note 2) 340 419
Add:
Trade investment and other non-operating income 608 605
Income before finance charges and taxation 948 1 024
Deduct:
Net finance charges (Note 3) 154 140
Income before taxation 794 884
Taxation 308 361
Income after taxation 486 523
Attributable to outside shareholders in subsidiaries (Note 4) 92 74
Own earnings 394 449
Share of retained income of joint ventures 42 4
Net earnings before special items 436 453
Costs/payment in terms of class action settlement agreement (Note 5) (10) (57)
Impairment in respect of Canadian mining assets (Note 6) (965)
Surplus in respect of exploration interests (Note 7) 18 105
Surplus in respect of the sale of 26% of DBCM (Note 4) 229
Net earnings (521) 730
Underlying earnings reconciliation (Note 8)
Net earnings before special items 436 453
Adjusted for:
Surplus on realisation of fixed assets less provisions (8) (9)
Mine impairment and retrenchment costs 38 21
Net gains on non-hedge derivative financial instruments,
17 (40)
after taxation and minority interests
Underlying earnings 483 425
EBITDA 1 216 1 232
Ordinary distributions in respect of:
2006 – Repayment of share premium 473
– Interim 150
– Final 50
2007 – Interim 39
– Final 100Operating and Financial Review 2007 11
Consolidated balance sheet
31 December 2007 (abridged) US$ millions
31 December 2007 31 December 2006
Ordinary shareholders’ interests 3 013 3 532
Outside shareholders’ interests (Note 4) 379 302
Total shareholders’ interests 3 392 3 834
Net interest bearing debt (Notes 3 and 9) 4 057 2 944
Other liabilities 1 653 1 487
9 102 8 265
Fixed assets 7 090 6 394
Investments and loans 127 94
Diamond inventories and other assets 1 885 1 777
9 102 8 265
Exchange rates US$ = rand
- Average 7.02 6.72
- Period end 6.76 6.99
Cash flow information
31 December 2007 US$ millions
31 December 2007 31 December 2006
Cash available from operating activities 844 809
Investing activities
Fixed assets – Stay-in-business 383 245
– Expansion 1 120 949
Investments (Note 4) 109 (442)
1 612 752
Financing activities
Preference share capital redeemed 54 214
Share premium redeemed 473
Increase in long- and short-term debt (858) (1 089)
Ordinary distributions 125 173
(679) (229)12 Financial highlights
Notes to tables
1. Sales of rough diamonds for the 6. De Beers has made a provision 9. Cash has been offset against
year amounted to US$5.92 billion for impairment in respect of the interest bearing debt.
(2006: US$6.15 billion). mines that it is building in Canada.
This non-cash valuation adjustment 10. On 22 November 2007
2. Following a review of reporting against fixed assets has been agreement was signed for the
formats, the income statement necessitated by the strengthening disposal of Cullinan mine to the
has been changed such that the of the Canadian dollar versus the Petra Diamonds Cullinan Consortium
previously disclosed “diamond US dollar, the increase in long term for R1.03 billion. The balance
account” has been replaced with the fuel costs and labour costs, and sheet includes assets amounting
more generally accepted convention increased construction costs at the to US$218 million and liabilities
of “operating profit”. Comparatives Snap Lake mine. amounting to US$61 million in
have been restated accordingly. respect of this sale. Any gain or
7. On 16 April 2007, De Beers loss on this sale will be recognised
3. Preference share capital is concluded an agreement of sale in once all conditions precedent have
included in net interest bearing debt. respect of its 50% interest in Gope been fulfilled.
Preference dividends, amounting to Exploration Company which resulted
US$21 million (2006: US$32 million) in a profit of US$17 million.
are included in finance charges.
In the prior year, De Beers Canada
4. In April 2006, De Beers concluded concluded the sale of its 42%
a broad based Black Economic participating interest in the Fort a
Empowerment (BEE) transaction La Corne Joint Venture to Shore
which resulted in 26% of De Beers Gold Inc for C$180 million (US$155
Consolidated Mines Limited being million), of which tax amounting to
sold to the Ponahalo Consortium US$50 million was attributable.
for R3.7 billion. This resulted in
a profit of US$229 million in the 8. Underlying earnings comprise net
consolidated income statement. earnings attributable to shareholders
As a result of the sale transaction, adjusted for the effect of any special
US$473 million was returned to the items and remeasurements, less
shareholders through a repayment any tax and minority interests.
of capital. The sale process Special items include closure costs,
involved, inter alia, the arrangement exceptional legal provisions and
of incremental financing of US$640 profits and losses on disposals
million in revolving and term facilities of assets. Remeasurements are
and facilitation by De Beers in the recorded in underlying earnings in
form of guarantees amounting to the same period as the underlying
approximately US$130 million. transaction against which these
instruments provide an economic,
5. Legal costs incurred in but not formally designated, hedge.
respect of the class action
settlement agreement amounted
to US$10 million. Foreign exchange rates to US$
(all average 2007)
In terms of an amended class action
settlement agreement concluded South Africa rand (R): 7.02
in the prior year, US$45 million was Botswana pula (P): 6.11
paid into escrow in 2006 pending
Namibia dollar (N$): 7.00
conclusion of the settlement process.
Legal costs incurred in 2006 in Canada dollar (C$): 1.08
respect of the settlement amounted Tanzania shilling (TZS): 1 244.00
to US$12 million.
Britain pound (£): 0.50Operating and Financial Review 2007 13
14 Exploration
14
2.9 LA7 1 7
Operating highlights assessment of kimberlites at deposit Canada (Holdings: 148 000km2)
The 2007 calendar year was one level is now well-established. All Group Exploration conducted
of significant progress for Group reconnaissance phase work was both early and advanced stage
Exploration with focus on highly completed in new concession exploration activities in Canada
prospective projects in Angola, areas with projects moved into the focused on projects in both the
Botswana, Canada, the Democratic discovery phase. Slave and Superior cratonic target
Republic of Congo (DRC), India, areas. The main goal in 2008 will
Namibia, Russian Federation and Botswana (Holdings: 28 800km2) be to target the Attawapiskat area
South Africa. Global exploration Advanced stage evaluation in surrounding the Victor mine to
expenditure amounted to US$126 Botswana resulted in the Orapa search for more kimberlites that
million in 2007. Group Exploration AK06 kimberlite project progressing could potentially contribute to the
discovered 45 kimberlites in 2007, with the filing of an application reserves of the mine.
the bulk of which were in the DRC for a mining licence. The bulk
and Angola. In conjunction with their sampling programme for the Orapa The DRC (Holdings: 18 800km2)
respective joint venture partners, kimberlites was initiated in 2004 The focus in the DRC during
these projects are yielding promising and is approaching completion with 2007 was to move out of the
results as they move rapidly from nearly 25 kimberlites assessed. reconnaissance phase into high
early to advanced stages. Through a process of technical interest target areas. In so doing,
reviews the work focus in Botswana the large ground holdings portfolio
Angola (Holdings: 12 000km2) is moving back into reconnaissance was significantly reduced to some
In the Endiama-De Beers and discovery mode in prospective 18 800km2. The main area of focus
(ENDEB) joint venture concession target areas in order to assess data is the Société Kasaïenne de Diamant
in Angola, the process of bulk and identify prospective target areas (SKD) joint venture with Minière de
sampling, treatment and laboratory for future exploration work. Bakwanga (MIBA) in the groundOperating and Financial Review 2007 15
ECoHS (Environment, Community, Health and Safety)
1
surrounding the Mbuji-Mayi diamond ECoHS overview1 DRC are to remain at the forefront by
mines. To this effect, in early 2008 The combined Lost Time Injury way of short term technical delivery.
the dense media separation plant Frequency Rate (LTIFR) for Focus in other countries will be on
and large diameter drilling rig will exploration was 0.20 in 2007 (2006: planning, identifying priority target
be commissioned for bulk sampling 0.37). This significant improvement areas and executing the discovery
purposes and teams will be was a result of the degree to which phase to fully develop exploration
established to drill sample and treat senior managers have elevated portfolios that will be able to deliver
the kimberlite bulk samples. health and safety issues, as well in the medium term.
as staff training. There were no
Other countries fatalities. Group Exploration,
In southern Africa, collaboration facilitated by ECoHS Guidelines,
with Namdeb and DBCM and their developed a corporate social
respective joint venture partners responsibility framework to inform
prioritised early stage exploration the selection and management
in northern Namibia and South of community projects for each
Africa respectively. The operation in exploration venture. Environmental
India was restructured in order to and social baseline studies were
appropriately resource it for an completed in Angola and Botswana.
early stage portfolio. De Beers Similar studies are planned for the
steadily increased its exploration DRC in 2008.
activities in the Russian Federation
where technical collaboration and Outlook in 2008
relationship building efforts continue Group Exploration’s 2008 outlook
with Alrosa and other entities. remains positive. Angola and the
Charles Skinner, Head, Group Exploration16 Operating highlights
16
Figure 2: Production statistics
Tons treated (thousands) Carats recovered (thousands)
2007 2006 2005 2007 2006 2005
Cullinan 2 277 2 942 4 608 964 1 150 1 305
Finsch 6 018 5 786 5 937 2 334 2 275 2 216
Kimberley and contractors 10 070 11 123 9 671 1 638 1 945 1 897
Koffiefontein 34 1 817 124
Namaqualand and contractors 4 701 6 412 6 452 767 978 1 014
The Oaks 253 262 250 94 103 86
Venetia 6 267 6 050 5 933 9 081 8 117 8 515
South African Sea Areas (SASA) 121
DBCM 29 586 32 610 34 668 14 998 14 569 15 157
Land 23 669 25 356 26 371 999 1 035 798
Sea 555 1 177 1 050 977
Namdeb 24 224 25 356 26 371 2 176 2 085 1 775
Orapa 18 755 18 443 16 500 18 708 17 338 14 890
Letlhakane 3 753 3 723 3 458 1 113 1 089 1 097
Damtshaa 2 804 1 461 1 289 341 228 303
Jwaneng 10 300 10 108 10 007 13 476 15 638 15 599
Debswana 35 612 33 735 31 254 33 638 34 293 31 889
Williamson Diamonds 3 205 2 963 3 394 220 189 190
De Beers Canada 113 81
Grand total 92 740 94 664 95 687 51 113 51 136 49 011Operating and Financial Review 2007 17
Future production prospects
Insight
• B
oteti Exploration Company, • T
he advanced exploration • In 2008, the group aims to
the joint venture between project at Gahcho Kué in maintain production capacity at
De Beers, African Diamonds Canada’s Northwest Territories 2007 levels with new production
Plc and Wati Ventures, filed for completed successful winter of over 1.5 million carats from the
a mining licence for the AK06 and summer drill programmes Canadian mines offsetting the
kimberlite in Botswana. AK06 has and is scheduled to start the impact of the sale of the Cullinan
a reserve of approximately 11.1 environmental permitting process. mine and Kimberley operations.
million carats.
• In 2007, De Beers committed • D
BCM was informed by the South
• T
he Victor mine in Canada is US$126 million to exploration African Department of Minerals
expected to start production with significant investment in the and Energy (DME) that it has
in mid-2008. Once fully Democratic Republic of Congo granted a New Order Mining
commissioned, it will produce (DRC) and early and advanced Right in respect of the Venetia
600 000 carats annually. programmes in Angola, Botswana mine on 4 February 2008. DBCM
and South Africa. In Angola and has already been granted New
• T
he Voorspoed mine in the DRC, the team is focused Order Mining Rights for the
South Africa is scheduled for on optimising holdings in order Cullinan and Voorspoed mines.
commissioning in 2008 moving to to move projects into advanced Conversions for the Finsch,
production in 2009. The mine will stages. In 2008, programmes will Kimberley and Namaqualand
produce 700 000 carats annually. focus on the 45 new kimberlites mines are being processed by
identified in 2007. the DME.18 Operating highlights
2.9 EN8 EN16 LA7 1 7 6 7
2007 2006 2005
Angola Zambia
Number of mines 4 4 4
Mining licence area (ha) 37 714 30 935 30 949
Carats recovered (thousands) 33 638 34 293 31 889 Zimbabwe
Safety Namibia 4
1
3
Lost time injury frequency rate 0.16 0.13 0.15
Botswana
Lost time injury severity rate 3.13 55.62 3.09
Fatal injuries 0 1 0 2
Environment
Energy use (million GJ) 5.18 4.58 4.72
Carbon dioxide emissions (million tonnes) 0.79 0.64 0.68
Water use1 (million m3) 26.69 (30.20%) 27.54 (27.25%) 26.93 (28.82%) South Africa
1
Includes potable, non-potable and recycled water. Brackets show the percentage of water
consumption derived from recycled sources
2
ECoHS (Environment, Community, Health and Safety)
Operating highlights Orapa and Letlhakane mines Outlook for 2008
In 2007, Debswana’s diamond returned an improved LTIFR of 0.09 Debswana’s short to medium
production remained comparable to (2006: 0.12). term outlook remains positive with
2006 with 33.6 million carats mined performance expectations in line
from 35.6 million tonnes treated Debswana’s diamond mines with the company’s strategic targets.
(2006: 34.3 million carats mined from maintained their Occupational Challenges in the form of regional
33.7 million tonnes treated). The Health and Safety Advisory Service power shortages, tyre shortages,
slight drop in production was due to (OHSAS) 18001 certification in 2007. geotechnical complications at the
reduced production from Jwaneng Jwaneng mine also implemented mining operations and a general
mine at 13.5 million carats (2006: the SAFEmap behaviour-based skills shortage are expected to exert
15.6 million carats). safety process. This will help further pressure on operating costs.
reduce injuries in future years. All Electricity shortages in South Africa
Challenges for the year included diamond mines are also certified had a limited impact on Debswana
inflationary pressure on key to the International Organization in 2007. Debswana is exploring a
consumables such as fuel and a for Standardization (ISO) 14001 number of energy options including
global shortage of tyres for mine environmental management the development of an independent
machinery. This resulted in a standard. There were no major power generation capability to
15% increase in operating costs environmental incidents in 2007. reduce energy risks in future years.
compared to 2006 figures. The tyre Moderate incidents included a diesel
shortage and corresponding low spillage and two water loss incidents In 2008, Debswana will continue
availability of trucks resulted in a due to burst pipes. to review expansion opportunities
6% fall in planned mining asset including resource extension
utilisation compared to budget. Positive trends were recorded in programmes, treatment plant
Stockpiling of tyres, testing new the company’s HIV/AIDS Disease replacements, open pit expansions,
brands and improvement in road Management Programme (DMP). underground mining potential
conditions, among other strategies, AIDS-related in-service deaths and recovery of diamonds from
were adopted to prolong tyre life. declined by 35% to 11 (2006: 17). processed kimberlite waste dumps.
Growth of 34% was recorded in
ECoHS overview2 spousal registration for the DMP.
The combined Lost Time Injury Employee registration increased by
Frequency Rate (LTIFR) for 18%. The registration of dependents
Debswana was 0.16 in 2007 (2006: more than quadrupled. This includes
0.13). There were no fatalities. The the children of employees. Orapa,
main contributors to an increased Letlhakane and Jwaneng mines are
LTIFR were one lost time injury on all certified to the AIDS Management
the coal wash plant construction site System (AMS) 16001 standard. Work
at Morupule Colliery (100% owned is underway to adopt South African
by Debswana) and several lost National Standard (SANS) 16001,
time injuries at the Jwaneng mine. the replacement for AMS 16001.
Blackie Marole, Managing Director, DebswanaOperating and Financial Review 2007 19
2.9 EN8 EN16 LA7 1 7 7
2007 2006 2005
Angola Zambia
Number of mines 5 5 5
Mining licence area (ha) 795 184 778 696 786 697
Carats recovered (thousands) 2 176 2 085 1 775 Zimbabwe
Safety
Lost time injury frequency rate 0.17 0.35 0.18
Namibia
14 Botswana
Lost time injury severity rate 6.83 12.72 2.13 13
18
Fatal injuries 0 0 0
Environment1
15
Energy use (million GJ) 2.24 2.20 1.89
17
Carbon dioxide emissions (million tonnes) 0.32 0.32 0.26
Water use2 (million m3) 2.47 2.12 1.63
South Africa
1
Does not include De Beers Marine Namibia
2
Includes potable, non-potable and recycled water. Does not include seawater. Does not include
seperate figures for the percentage of water consumption derived from recycled sources
Operating highlights ECoHS overview The closure plan builds on existing
For the second year in succession The combined LTIFR for all Namdeb socio-economic baseline studies
Namdeb recovered in excess of operations was 0.17 in 2007 (2006: and impact assessment work. It also
two million carats. Production from 0.35). There were no fatalities. draws on our ongoing environment
marine mining yielded 1.18 million and rehabilitation studies being
carats in 2007 (2006: 1.05 million All Namdeb operations were conducted in partnership with the
carats). Production from land-based audited against the National Millennium Seed Bank Project and
operations yielded 999 000 carats Occupational Safety Association the Royal Botanic Gardens, Kew.
(2006: 1.04 million carats). (NOSA) Integrated Safety, Health
and Environmental System. All three Outlook for 2008
Production from the Elizabeth operations retained their 5-Star Namdeb expects to exceed the
Bay mine exceeded planned “platinum grading” and National record production levels achieved in
production for the first time since the Occupational Safety Credited 2006 and 2007 as Pocket Beaches
commissioning of the new plant in Award (NOSCAR) status. Namdeb site 11 and 12 produce for a full
2004. Marine mining in the also achieved a new milestone year. Work is currently underway to
Atlantic 1 mining area also exceeded by obtaining OHSAS 18001 extend the life of Namdeb’s land-
plan, producing 1.14 million carats. certification. Namdeb also retained based mining operations. As these
These figures were achieved in spite its ISO 14001 certification for all operations near the end of their
of production disruptions as a result certified areas and its environmental operating life, Namdeb will look
of a fire and subsequent inaction of management programme. increasingly to marine operations
the No. 3 plant for five months during to satisfy increasing international
the year. The current minerals agreement demand, and to maintain production
for Namdeb’s land-based and revenues.
Adverse sea conditions during operations in Oranjemund expires
the winter of 2007 resulted in at the end of 2020. Namdeb is
additional work to maintain sea- working in partnership with the
walls protecting the low-lying mining government, local communities,
areas on land. This, together with non-governmental organisations and
the additional costs incurred as a other stakeholders to develop and
result of the No. 3 plant fire and implement a plan for downscaling
the cost of transportation of ore to and closure. The plan is aligned
alternative treatment facilities led with the Namibia Vision 2030
to unbudgeted production cost and international development
increases during the year. goals. It acts as a framework for
our continued contribution to
development and will help ensure
www.un.org/millenniumgoals the sustainable livelihoods of
www.kew.org/msbp employees and local communities
Report to Society 2007 – environment post land-based mining.
Inge Zaamwani-Kamwi, Managing Director, Namdeb20 Operating highlights
2.9 2.10 EN8 EN16 LA7 1 7 3 7
2007 2006 2005 Zimbabwe
Number of mines 8 7 7
Mining licence area (ha) 114 535 112 570 115 513 6
Carats recovered (thousands) 14 998 14 569 15 157
Botswana
Safety Namibia 5
Lost time injury frequency rate 0.21 0.21 0.22
8
Lost time injury severity rate 10.75 54.13 48.27
Fatal injuries 0 1 1 9 3
12
Environment1 16
South Africa
Energy use (million GJ) 5.87 5.31 5.68
Carbon dioxide emissions (million tonnes) 0.82 0.87 0.97 19
Water use2 (million m3) 17.51 (13.66%) 19.65 (11.44%) 20.72 (24.46%)
10
1
Does not include De Beers Marine
2
Includes potable, non-potable and recycled water. Does not include seawater. Brackets show the
percentage of water consumption derived from recycled sources
Operating highlights Economic Empowerment (BEE) The mine closure process for The
In 2007, De Beers Consolidated partner, Sedibeng. In October 2007, Oaks mine has started with an
Mines (DBCM) recovered 15.0 it concluded the sale of a portion objective to finalise in November
million carats from 29.6 million tons of its tailings mineral resources 2008. Environmental and safety
treated (2006: 14.6 million carats to the Small Miners’ Forum (100% risks were reviewed and are being
from 32.6 million treated). Production broad-based BEE consortium). In addressed for all dormant mines
successes were attributed to November 2007, a sale agreement across DBCM’s portfolio.
configuration changes to the Venetia was signed for the Cullinan
plant and the continued good Diamond Mine (CDM) with the Petra Outlook in 2008
performance of both Kimberley’s Diamonds Cullinan Consortium In 2008, DBCM will accelerate the
Combined Treatment Plant and small (PDCC). PDCC is comprised of implementation of its continuous
mining contractor production. Petra Diamonds, Al Rajhi Holdings business improvement drive. The
and their empowerment partner commissioning of the Finsch
The year also saw significant Thembinkosi Mining Investments. In mine treatment plant upgrade will
progress in DBCM’s transformation 2008, DBCM will continue to seek increase levels of dump re-treatment
process. The Voorspoed mine ways to further the transformation of and improve plant effectiveness,
introduced female haul truck drivers. the South African economy and to adding 1.4 million tonnes per annum
The Kimberley mine appointed the increase participation by companies of treatment capacity and enhancing
first female operations manager in with empowerment credentials profitable production growth in 2008.
DBCM’s 119 year history. Female throughout the diamond value chain. In addition, the Voorspoed mine
haul truck drivers are already in will be commissioned in 2008, with
place at the Venetia mine. Applications for New Order Mining production anticipated for 2009.
Rights were submitted to the DME
In line with DBCM’s growth by all DBCM mines. CDM’s New
aspirations, the marine mining Order Mining Right was approved in
vessel, Peace in Africa, marked its November 2007.
first day of operation in June 2007
and is set to be fully operational in ECoHS overview
2008. Construction of the Voorspoed The LTIFR for DBCM was a record
mine in the Free State province is 0.21 in 2007 (2006: 0.21) with no
ahead of the revised schedule. fatalities. The Finsch mine achieved
a significant milestone of six million
DBCM continued to improve the fatality-free shifts, for which it
financial performance of its mines received an award from the DME.
as part of the operational portfolio The Oaks mine achieved 82 months
review in South Africa. In September without incurring a lost time injury. All
2007, DBCM sold the underground DBCM mines are certified to both
operations of Kimberley mines ISO 14001 and OHSAS 18001.
to Petra Diamonds and its Black
David Noko, Managing Director, DBCMOperating and Financial Review 2007 21
2.9 EN8 EN16 LA7 1 7 7
2007 2006 2005
Number of mines 1 0 0
Mining licence area (ha) 10 387 5 990 5 990
Carats recovered (thousands) 81 11
Safety
Lost time injury frequency rate 0.17 0.28 0.52 Canada 2
Lost time injury severity rate 11.7 18.48 14.84
Fatal injuries 0 0 0
Environment1
Energy use (million GJ) 0.72 0.50 0.47 United States
Carbon dioxide emissions (million tonnes) 0.05 0.04 0.03
Water use2 (million m3) 0.23 (57.73%) 0.09 (0.00%) 0.03 (0.00%)
1
Does not include exploration activities in Canada
2
Includes potable, non-potable and recycled water. Brackets show the percentage of water
consumption derived from recycled sources
Operating highlights Snap Lake, Northwest Territories ECoHS overview
The 2007 calendar year marked Construction of the process plant, The combined LTIFR for De Beers
the transition of De Beers Canada utilities and service buildings was Canada was 0.17 in 2007 (2006:
from an exploration company to close to completion by year end. 0.28). There were no fatalities.
a fully integrated exploration and Commissioning of the main process De Beers Canada’s exploration
mining operation. Both the Snap plant began ahead of schedule, with division was honoured by the
Lake and Victor mines successfully the first diamonds being produced Association of Mineral Exploration
moved through construction and in August 2007. The underground and the Prospectors and Developers
commissioning with the Snap Lake construction of the crusher chamber Association of Canada with the
mine producing its first 81 000 and conveyor system is on target for Canadian Mineral Exploration
carats. Despite shortages in skilled completion in early 2008, with full Annual Safety Award for the highest
labour, both the Snap Lake and production anticipated by mid-2008. performance in health and safety for
Victor mines achieved their targeted the 2006 calendar year.
recruitment milestones, building a Victor, Ontario
highly skilled permanent workforce. The Victor team completed Outlook in 2008
site construction, enabled the De Beers Canada is implementing
Agreements signed processing plan to become fully and rolling out a new strategy and
A number of Impact Benefit operational and is currently six vision. The company is actively
Agreements (IBAs) were reached months ahead of schedule. It also looking to condense the project
with Aboriginal communities. surpassed three million hours development timeline, focus
This includes with the Lutsel K’e without a lost time injury. its exploration efforts, examine
Dene community in the Northwest acquisition, divestment and joint
Territories (NWT), and the Moose Gahcho Kué, Northwest Territories venture strategies and build a stable
Cree. Final draft agreements were Work to collect environmental and of sustainable projects.
developed with the Kashechewan socio-economic baseline information
and Fort Albany communities in continued throughout the year in
Ontario. De Beers Canada also preparation for the submission of
signed a new agreement with the a detailed project description and
Government of the Northwest environmental impact statement.
Territories (GNWT) confirming that Successful completion of a
10% of any future rough diamond winter drilling campaign, followed
production from the Gahcho Kué by a drilling programme at the
project will be made available “5034” kimberlite pipe increased
to support the local secondary confidence in the economic potential
industry. This agreement builds on of the ore body. Engineering reviews
the company’s agreement with the aimed at optimising the capital and
GNWT to supply rough diamonds operational aspects of the project
from the Snap Lake mine to local were successful in identifying the
cutting and polishing factories. potential for significant savings.
Jim Gowans, Managing Director, De Beers Canada22 Operating highlights
2.9 EN8 EN16 LA7 1 7 7
2007 2006 2005 Uganda
Number of mines 1 1 1
Mining licence area (ha) 2 973 2 973 2 973 Kenya
Carats recovered (thousands) 220 189 190
7
Safety DRC
Lost time injury frequency rate 0.27 0.07 0.33
Lost time injury severity rate 333.73 1.73 10.90 Tanzania
Fatal injuries 1 0 0
Environment
Energy use (million GJ) 0.25 0.24 0.26
Carbon dioxide emissions (million tonnes) 0.04 0.04 0.04
Zambia
Water use1 (million m3) 6.69 (22.51%) 8.83 (32.08%) 8.61 (29.45%)
1
Includes potable, non-potable and recycled water. Brackets show the percentage of water Mozambique
consumption derived from recycled sources
Operating highlights to open the office of the Mwadui seven million tons per annum. This
Although the Mwadui ore body is the Community Diamond Partnership will result in an estimated annual
largest mined kimberlite pipe in the (MCDP). The aim of the MCDP is production of 500 000 carats and an
world, its low grade and increasing to alleviate poverty and accelerate extension of the mine’s economic life
clay content means that the mining sustainable socio-economic by at least 23 years.
operation remains technically and development in the artisanal
financially challenging. diamond mining communities In November 2007, the Board
surrounding the Mwadui mine. The of WDL recommended that the
Diamond recovery at Williamson eight villages involved in the project expansion project should proceed
Diamonds Limited (WDL) during have each elected representatives to to a full feasibility study. This is
2007 totalled 220 209 carats (2006: form the MCDP Community Liaison subject to an agreement being
189 396 carats) from 3.2 million Team and the project is at the stage reached between the shareholders
tons of ore treated (2006: 3.0 million of participatory project planning. on a number of proposals that aim
tons). The increase in diamond to support shareholder returns and
production was due to the Plant In September 2007, WDL’s mitigate risk.
Improvement Project, initiated in Environmental Management Plan
August 2006. This project targeted was approved in accordance with all In 2008, De Beers and the United
increased throughput at the main requirements laid down in Tanzanian Republic of Tanzania will celebrate
treatment plant, enhanced security law. This plan includes water their 50th anniversary as joint
controls and improved process management, waste processing shareholders in WDL.
efficiencies. The project, which will and management, optimum energy
cost TZS1.5 billion (US$10 million) usage and land rehabilitation of
will be fully completed by mid 2008. mined areas.
ECoHS overview A key milestone for the operation
It is with regret that WDL was the successful ISO 14001 and
management records the death of OHSAS 18001 audit conducted
James Mwita Muhere on 19 August during October 2007. Confirmation
2007. Mr Muhere, a scrubber of both certificates is expected in
attendant, was killed while working the first quarter of 2008.
at the WDL plant. The LTIFR for WDL
was 0.27 in 2007 (2006: 0.07). Outlook in 2008
Technical investigations conducted
In August 2007, His Excellency at Mwadui, with support from
President Jakaya Kikwete De Beers technical consultants, have
accompanied by WDL Chairman concluded that the introduction of
Jonathan Oppenheimer visited mineral sizing and AG (autogenous)
Mwadui to inspect the results of milling technology could achieve
the Plant Improvement Project and increased throughput of more than
Tony Devlin, Managing Director, Williamson DiamondsYou can also read
