De Beers to shut famous operations in South Africa, but expand in Canada.

LONDON -- De Beers SA is preparing to close its historic underground mines in Kimberley, South Africa, by the end of the year with the loss of about 1,000 jobs, the world’s biggest diamond miner said yesterday.

De Beers, 45-percent owned by Anglo American Industrial Corp. Ltd., has been hinting for some time that it might close the three underground mines. Five of its seven South African operations failed to make a profit in the six months just passed, in part because of the country’s strong currency.

“The Kimberley mines are exhausted. They have been going for 100 years and that is why we are already in a process of consultation, which will lead to the closure,” Mr. Ralfe told Reuters during an interview at the London headquarters of its marketing arm, the Diamond Trading Company. “By the end of this year, I believe we will have closed down the Kimberley underground mine,” he said.

De Beers, meanwhile, is expanding outside South Africa. De Beers Canada Inc. said yesterday it will spend $38.5 million to advance development of the Gahcho Kue diamond mine in the Northwest Territories.

“Our intention is to make this our second diamond mine in the Northwest Territories and we believe the timing of the project is ideal for the long-term sustainability of the diamond industry in the north. ”De Beers is spending $1.6 billion over the next four years to develop the Snap Lake mine in the Northwest Territories and the Victor mine in Northern Ontario in 2006.

Retracted outlook

Once synonymous with South African mining, De Beers SA is evolving into a world player in diamond exploration, development and marketing. As the company begins to close some of its profitable operations in South Africa, it is investing billions of dollars in Canada to create new diamond mines.

Scaling down in South Africa

Kimberley

Underground mine established in 1871 to be closed by end of year

Employees: 1,749

Production:

2004: 2,050,907 carats, grade - 22.6 carats per tonne

2001: 549,725 carats, grade - 14.6 carats per tonne

Koffiefontein

Underground mines established in 1870 to be closed or sold this year

Employees: 500

Production:

2004: 113,481 carats, grade - 5.8 carats per tonne

2001: 145,061 carats, grade - 6.3 carats per tonne

Ramping up in Canada

Snap Lake

Will be Canada’s first underground diamond mine

About $72 million being spent in 2005 on project’s development

Full processing of 300,000 tonnes of ore a day is expected to start in 2008

Gahcho Kue

Joint venture is in early stages of development; De Beers Canada has committed

$38.5 million for this year and next for environmental and permitting matters.

Expected employment: 300

Production expected to be three to four million carats a year; grade - 1.64 carats per tonne.

Victor

An open pit mine with an expected life of 12 years.

Total capital cost expected to be $860 million; $98 million has been invested to date.

Expected employment: 300

Production expected to be 600,000 carats a years, grade - 0.223 carats per tonne