Petra Diamonds restarts output at Tanzania mine

Petra Diamonds Ltd. resumed production at the Williamson mine in Tanzania after spending almost two years rehabilitating the world's largest diamond deposit by surface area.
"Production commenced in March and April," Cathy Malins, a spokeswoman for the London-based company, said in an e-mailed response to questions yesterday. The project is expected to operate at about 3 million metric tons of ore a year "for the foreseeable future."
Tanzania's Mines Ministry expects diamond production to increase to about 150,000 carats this year from 28,377 carats last year following the expansion of Williamson, Ally Samaje, the acting commissioner in the ministry, said last month. Output fell from 80,498 carats in 2010 because of the rehabilitation work at the mine, he said.
Tanzania, which vies with Mali to be Africa's third-biggest gold producer, relies on mining to generate 3.7 percent of gross domestic product. The Williamson mine, in which the government owns a 25 percent stake, was previously owned by De Beers, the world's largest diamond producer by value.
Petra declined to give a forecast for future production at the mine. The company is reviewing the second phase of its expansion program and will update the market on the Williamson plan in "the near future," Malins said.
‘Very Long Life'
"We anticipate a very long life for this asset due to the size of the 146-hectare (361-acre) ore body," she said. The Mwadui kimberlite pipe, upon which the Williamson mine is based, contains a diamond resource of about 40 million carats, according to the company's website. Kimberlites are rock formations that may contain diamonds.
Petra's initial mine plan, based on a schedule to take the mine to a 10-million-ton-per-annum operation, has a lifespan of 17 years, Malins said.
Williamson, discovered by Canadian geologist John Williamson in 1940, has been mined for more than 70 consecutive years, making it the world's longest uninterrupted diamond mining operation. The mine has an "immensely large" resource located within an open pit, according to Petra's website.
Petra bought De Beers' 75 percent in Williamson in February 2009 for $10 million.
The company spent $65 million on the rehabilitation program, which included reshaping the open pit and a "major rebuild" of the existing plant at the mine, Malins said. In reviewing the expansion plan, Petra may consider building a new plant at Williamson, according to Malins.
Power Supplies
The company will also seek to confirm a "secure" supply of electricity from Tanzania Electric Supply Co., the state-run power utility, she said.
Tanzania, East Africa's second-biggest economy after Kenya, had an electricity deficit of 264 megawatts in February 2011 following a drop in hydropower generation after a drought. The resulting power outages caused economic growth to slow to 6.4 percent in the third quarter of 2011 from 6.7 percent a year earlier.
Petra's portfolio includes eight producing diamond mines, seven in South Africa and Williamson, according to information on the company's website.
Shares in Petra fell 2.7 percent to 148.60 pence at 4 p.m. in London yesterday. The stock has gained 29 percent so far this year.