De Beers Harvests Diamonds at the Bottom of the Sea – by Alexandra Wexler (Wall Street Journal – October 20, 2016)

http://www.wsj.com/

ORANJEMUND, Namibia—A dozen miles off the southwestern edge of Africa’s Atlantic coast, a 285-ton vacuum machine operating 400 feet below sea level is sucking some of the world’s most valuable diamonds from the ocean floor.

The $10 million crawler is part of a one-of-a-kind marine-diamond mining operation dubbed Debmarine Namibia. A joint venture between De Beers, a unit of Anglo American PLC, and the government of this sparsely populated desert nation, the marine mine has emerged as a rare revenue driver in today’s languishing commodities markets.

Remote and secretive, the operation is only reachable by a 30-minute helicopter ride from sleepy Oranjemund, a town built by the diamond-mining industry to house workers and their families in the Sperrgebiet, or Forbidden Area, where diamonds were once mined from the sand dunes by the shovel-full.

Parent Anglo American is cutting costs, unloading most of its assets and more than half of its employees. But De Beers—which accounted for 42% of Anglo’s earnings before interest and taxes in the first half of 2016—is pouring money into its increasingly lucrative marine-mining operation that is yielding some of the world’s highest-quality diamonds.

Operations such as Debmarine highlight how the impending closure of older mines and a looming global diamond shortage are forcing miners to explore new technologies and reserves. “We’ve not taken the foot off the gas on any [Debmarine] investment,” says Bruce Cleaver, De Beers’s chief executive.

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