Playing with the Big Boys: Is Petra Diamonds Ltd Heading to the Majors?
January 01, 08
By Ronit Scheyer
 Petra's Alto Cuilo mine in Angola |
Before the news about the Cullinan purchase was released, Petra Chairman Adonis Pouroulis said that Petra expected to realize a minimum production of 250,000 carats in 2007 and 400,000 to 500,000 in 2008, not including production from operations in Angola or Botswana. The acquisition of a world-class mine such as Cullinan will shatter these numbers, increasing Petra’s production by 1 to 2 million carats per year, he said.
The Cullinan mine contains more than 60 million high-quality carats. In a separate section of the mine, which hasn’t yet been broken into, there is estimated to be at least another 70 million carats. All of this means that, in the near future, Petra may just realize its goal of being a major diamond player, on par with the world’s three major diamond producers.
Petra’s maturation is a well-laid-out strategy with three main parts – exploration, production and beneficiation. Exploration is a major part of Petra’s operations, and, as Pouroulis explained, it is nothing new. “We’ve always had an exploration portfolio. What we’ve done is gone to the areas where we think there’s a chance of finding diamonds. But I wouldn’t say we’ve been lucky. It takes a lot of time, and, therefore it takes being patient.”
Petra’s beneficiation gives jobs and provides amenities and services, funded by production revenues, to the local population. For example, the company treats 400 a month at a clinic in just one mining and production area. Although the clinic was set up for employees, its effects are felt beyond the immediate Petra community as anyone else who needs care is treated for free. “These people are your future workforce; you need them. If you haven’t got them, you’ve got nothing,” said the company’s chairman.
The company has also made clean water available to a village near one of its mines. “When you look at a village – at a woman who for the last 30 years has been walking to the river to get water, you really don’t know how clean that water is. So we brought pumps there – pumps through our camp that bring the water and pumps we also diverted to bring water through the village. For the first time ever this village has clean, running water,” said Pouroulis.
When it comes to beneficiation, Petra claims commitment and delivers in action. In South Africa, not only does the company put the entire production up for tender – so everyone has access to their rough – it also plans to cut 20 percent of the rough mined in South Africa.
With all the anxiety and talk in the industry surrounding the topic of beneficiation, it is surprising to come across someone so enthusiastic about polishing in Africa, especially one who is doing it as something good for business. But Pouroulis emphasized that he is not worried about the future of the industry. “We believe in our industry,” he said. “There’s room for an Antwerp, there’s room for a Tel Aviv, there’s room for a Johannesburg, there’s room for a Gaborone, and there’s room for a Luanda – because you need all of these centers…This is not the beginning of the end, as some have claimed. Rather, the different diamond centers are symbiotic. The birth of one does not mean the death of the other. They are rather each other’s sustenance.”
The addition of the Cullinan mine to Petra Diamond’s portfolio, along with a carefully executed strategy of exploration, production and beneficiation, has the potential to realize Pouroulis’ goal of turning the company into a mining firm on par with the giants. Time alone will tell what will become of the drive for beneficiation and the looming supply shortage. One thing is for certain – Petra is not to be underestimated.