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Petra Diamonds opens tailings to artisanal miners in South Africa

Petra has abandoned plans to sell the business in favour of a debt-for-equity restructuring. (Image of Koffiefontein mine. Courtesy of Petra Diamonds.)

South Africa’s Petra Diamonds (LON:PDL) is opening up some of its tailings at Koffiefontein mine to small scale operators, in an effort to tackle illegal activities and solve some issues caused by artisanal miners.

“Petra believes that there is a space for artisanal small scale miners to co-exist with formalized, large-scale mining, since small and artisanal miners (ASM) can often profitably recover diamonds from resources that would be unprofitable, or at best marginal, for a larger operator due to the capital and overhead costs involved,” the company said on Thursday.

The initiative, the diamond miner said, comes after extensive consultation and cooperation with relevant shareholders. Those include South Africa’s Department of Mineral Resources and Energy (DMR&E) as mining sector regulator, and the Letsemeng Local Municipality as elected representatives of the community, and the community itself.

Petra believes there is space for artisanal small-scale miners to co-exist with formalized, large-scale mining

This is not the first time Petra has allowed artisanal miners to use its tailings. It previously carried out a similar exercise at Kimberley, in Northern Cape, where small scale miners operated “the floors” of the property — an area previously worked by Kimberley’s founding miners.

That project, kicked off in 2017, wasn’t a complete success. Its then joint venture partner, Ekapa Mining reported a year later it was still spending R3 million (about $198,000) a month in security to keeping individual out of its operating boundaries. Petra sold its stake in the Ekapa partnership last year.

Applying lessons learned at Kimberly, Petra intends to help regulate artisanal miners so that they would comply with the Kimberley Process Certification Scheme, and other global standards.

“We regard this initiative as yet another milestone in the Petra legacy and we welcome the Koffiefontein Community Mining Primary Cooperative as partners in our industry to complement our own operations and extract optimal benefit from the diamond reserves in Koffiefontein,” chief executive Richard Duffy said in the statement.

The company acquired Koffiefontein in 2007 and the asset generated $28.9 million in revenue for the fiscal year 2019, an increase of 6% from 2018.