Inside De Beers’s Hunt for Africa’s Elusive Diamonds – by Scott Patterson (Wall Street Journal – October 23, 2015)

http://www.wsj.com/

In Kalahari Desert, miner attempts to uncover next big discovery—without which the industry faces diminishing output

KALAHARI DESERT, Botswana—Crouching in the sun-scorched sand, De Beers geologist Charles Skinner picked up an ashy, white cylinder of rock and looked for shimmering evidence that an ancient volcano was sitting below his feet, containing billions of dollars’ worth of diamonds.

Mr. Skinner is at the vanguard of a new effort by diamond merchant De Beers to uncover the first major diamond mine in at least 20 years. De Beers last year launched an early-stage exploration push, focusing on the desert of southwest Botswana.

De Beers’ undertaking highlights the dilemma faced by diamond miners, who are forecasting diminishing supplies if they don’t discover new caches of gems. Only a blockbuster discovery will enable them to keep long-term production at current levels, according to De Beers and analysts.

The problem: Only a fraction of the world’s underground diamond deposits are large enough to justify the expense of harvesting them.

Mr. Skinner is spearheading the push by De Beers, a unit of Anglo American PLC, combining old-school drilling techniques with sophisticated big data and artificial intelligence technology in the quest to strike it lucky.

“On the odds side, the deck is stacked against you,” Mr. Skinner said. But “exploration depends more on perseverance than on luck.”

Other diamond miners, such as Alrosa Group, the world’s second-largest producer of diamonds by value behind De Beers, are ramping up exploration efforts as production plateaus.

Alrosa, whose core operations are in Russia, says its diamond reserves are sufficient to sustain stable production for 17 years. In Botswana, it is exploring four areas for diamond deposits. “We continue to replenish depleted reserves and search for new deposits,” an Alrosa spokeswoman said in an email.

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