De Beers Group, one of the world’s two major diamond-mining companies, said Thursday that it intends to sell its Kimberley Mines Tailings asset, its last production operation in the central South African town where it launched the modern diamond-mining business in 1888.

The unit, which extracts diamonds from waste from old mines, still makes money but has become too small relative to De Beers’ roster of mega-diamond mines. “It’ll still be profitable in 10 years,” said spokesman Tom Tweedy. “But the scale better suits a smaller, lower-cost operator.”

The Kimberley operation produced 722,000 carats last year, making it De Beers’s second-largest operation in South Africa but only 2% of the company’s overall production. De Beers is a unit of Anglo American PLC and has operations in Canada, Botswana, Namibia and South Africa. Last year it reported revenue of $7.1 billion, up 11%, and produced 32.6 million carats globally, second only to Russia’s Alrosa, which produced 36.2 million carats. The two companies usually account each for around a quarter of total global diamond production, far ahead of Rio Tinto PLC, in third place with around 10%.

De Beers sold its last mines in Kimberley in 2006 but continued to pull diamonds from the waste rock in a plant that uses X-ray and other modern technology.

As existing ore bodies get tapped out, mining tailings is a small but increasingly important niche business in the sector. Thanks to technology, it is possible to recover chunks of valuable minerals that were missed during the first go-round using more primitive mining techniques. The process, however, is fraught with risks, such as spilling old chemicals locked in the ground and competition from illegal miners sifting through the waste rock.

And it can be too low-volume at a time when big mining companies are seeking to stripdown to their core, mass-producing mines. De Beers has an exploration plan in Kimberley that covers the business until 2018. After that, however, it will need to map a new exploration program detailing which tailings piles will be most profitable to exploit. The risk, Mr. Tweedy said, is if production dips, it will be more difficult for De Beers to quickly cut operating costs than it would be for a smaller producer.

De Beers said it is inviting third parties to submit their expression of interest with a view to selling all the assets and associated debt in a single transaction, and hopes to conclude a sale “in a matter of months.” Mr. Tweedy declined to comment on a possible price, but said the unit generates several hundred million dollars year in revenue with more than $100 million in profit. By putting the asset on the block now, De Beers is allowing the buyer time to set up a business and exploration plan before De Beers’s own expires in 2018, he said.

Phillip Barton, chief executive of De Beers Consolidated Mines, a unit of De Beers that owns the mine, said the company was “engaging fully with employees, union representatives” and government, to ensure a smooth transfer of ownership and “facilitate a greater degree of job security.” De Beers employs about 320 people in its tailings operations. It will maintain a back-office sorting and selling operation in Kimberley, which employs around 500 people.

The diamond industry’s presence in town is a far cry from what it was in the late 19th century, when tens of thousands flocked to Kimberley to dig for diamonds with pick-axes. One of them was Cecil Rhodes, the English colonialist and explorer who founded De Beers and later gave his name to the country Rhodesia, which became Zimbabwe. The deposit was so big that Kimberley gave its name to that type of geological formation, the kimberlite, and the United Nations program for certifying conflict-free diamonds.

The juicy clusters are all gone now. Diamond deposits are notoriously difficult to find. A major new one hasn’t been discovered anywhere in the world since the 1990s. There are currently 7,000 miners who belong to the local chapter of the National Union of Miners, one quarter of the number 20 years ago.

The biggest legacy remaining is the Big Hole, a gigantic, empty cavity, 700 feet deep and 1,500 feet wide, in the middle of a main residential and business neighborhood. “The companies got all the diamonds,” says Lucas Phiri, the local union director, said during an interview in February. “What we got is a hole.”