Ellendale may be handed back to the state

The collapsed Ellendale diamond mine may be handed back to the state as the diamond market implodes.

The owner Kimberley Diamonds shut down the operation earlier this year, had demonstrated repeated late payments of royalties, and the miner faced with the prospect of losing their tenement four times in the past two years.

In late 2013 Kimberley failed to pay royalties after they received a refund of $12 million from the Mining Rehabilitation Fund (MRF).

Now it is expected Kimberley will shift the approximately $30 million cost of rehabilitating the Ellendale site back to the MRF.

In January this year the Department of Mines and Petroleum launched a forfeiture action over Kimberley’s failure to pay $200,000 in tenement rental for the Ellendale mining lease.

Out of four instances of threats to forfeit their tenement over failure to pay royalties, Kimberley was forced to pay a fine only once, amounting to $3087.

Now liquidators at Jirsch Sutherland are trying to hand the mine back to the WA Department of Mines and Petroleum in a bid to halt ongoing care and maintenance costs at the mine, according to The West.

This now firmly hands the aforementioned rehabilitation and remediation costs to the DMP.

It also means the $1.5 million in royalties owed will likely not be paid.

The likelihood of a buyer being found for the embattled mine is low, as the diamond market is enduring a prolonged slump.

According to the Zimnisky Global Rough Diamond Price Index prices have fallen close to 12 per cent over the last 12 months.

They then took a sharp turn downwards last quarter after a long plateau.

The concern in the sector was demonstrated through the creation of a global consortium, with its members ranging from ALROSA, Rio Tinto, De Beers, Lucara Diamond Corp, Petra Diamonds, Gem Diamonds, and Dominion Diamond Corp.

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