Rockwell Diamonds Takes Further Cost Cutting Measures

Rockwell Diamonds has extended its shutdown period to the end of January because of continued diamond market weakness and was preparing to shed jobs, Rockwell president and CEO John Bristow said on Monday, Miningweekly reported.

Bristow said that the company had elected to extend its shutdown period from the originally announced January 5 to the end of January, following a detailed management review of the prevailing static market conditions, cash flow projections, operational parameters and costs, the report said.
Also taken into account were technical factors, including grade characteristics of each diamond mining operation.

The company was restructuring its Middle Orange River operations to reduce costs and increase diamond production efficiencies, Bristow added.

The current plans were to ramp up diamond production at the new Saxendrift plant on the Middle Orange River from February and to suspend operations at the lower grade Wouterspan diamond operation nearby, until such time as a new high-volume, low-cost, twin modular pan plant was constructed and commissioned, said the report.

A new low cost, high volume plant was commissioned at Saxendrift towards the end of 2008, it said.

Bristow said that the proposed suspension of operations at the Wouterspan diamond mine was, “unfortunately”, likely to result in the reduction of staff there. To that end, negotiations had been initiated with employees and the National Union of Mineworkers.

The longer term plan was to upgrade the Wouterspan plant and then to reinitiate mining and processing.

A low cost degrit and cyclone system had replaced Holpan’s desanding unit, and further cost saving measures were ongoing at the company’s other diamond operations, which would restart at the end of January.

“Global economic conditions have brought diamond prices under pressure. In this environment, we continue to take steps to improve operational efficiencies and maintain the competitiveness. This has included the difficult decision to reduce our work force,” Bristow said.
In the past 12 months, Rockwell had been forced to adapt to power outages, spiraling costs, industrial action and a hostile takeover attempt, said the report.

Despite these challenges, the company had managed to achieve profitability, which set it apart from several of its peers, it said.

Rockwell’s financial results for the period ended November 30, 2008 were likely to be published on January 14, the report said.