Q&A’s for the Mining Sector, 2009

 (1) Whether the turnover of Alexkor has fallen by approximately 80% in the past

10 years; if so, why;

(2) whether the company makes any profit from its diamond mining operations; if not, why not; if so, what are the relevant details? NW2909E

 

 

(1) No, although information for 1999 is not readily available, turnover has fallen by 42% during the period 2000 to 2009. This is primarily due to factors of price and volume reduction.

 

(2) Profitability from the diamond mining operations has been erratic between 2000 and 2009 with profitability recorded between 2001 and 2006 whilst losses were recorded in the latter years. Results differ materially due to fluctuations in diamond prices and foreign currency exchange rates. The economic crisis negatively impacted diamond market prices and this resulted in reduction in the Rand diamond revenues. The diamond prices reduced as much as 50% in 2008 and 2009. This has been exacerbated by a decline in available sea days (days when safe mining can be conducted in the sea) from 79 in 2002/3 to 10 in 2008/9. Alexkor undertook a restructuring programme in order to contain costs. However, given the fixed nature of mining operational cost structure, Alexkor’s cost structure could not be adjusted proportionately to the reduction in revenue.

 

 

 

 

Sandra Coetzee                                                      Barbara Hogan, MP             

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