A perfect 100-carat natural diamond heading for auction at Sotheby’s in London. (Photo by Carl Court/Getty Images)
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The diamond crash claimed another victim this week as South African focused Petra Diamonds launched a business rescue plan for its financially distressed Finsch mine.
South African law allows for the appointment of a rescue practitioner when it is unlikely that a business will be able to pay its debts over the next six months.
Petra chief executive Vivek Gadodia said the rescue was necessary because of a weak market for diamonds and a strong rand, South Africa’s currency.
The Finsch diamond mine of Petra Diamonds in South Africa. (Photo by COLLART Hervé/Sygma via Getty Images)
Sygma via Getty Images
Financial trouble at Finsch continues a long run of diamond mine closures around the world as the full impact of cheap laboratory grown gems is felt in the market.
The steep fall in prices for natural, or mined diamonds, has hammered the performance of all miners, even the industry leaders, Russia’s Alrosa and London-based De Beers.
Alrosa’s struggle with low diamond prices is magnified by its Russian roots and best reflected in its all-time low share price reached this week at 25 rubles, down 48% over the last 12-months and 83% over the last five years.
De Beers, which is majority owned by prominent mining company Anglo American, has been forced to book a series of asset value write-downs, including $2.3 billion in last year’s accounts, on top of $2.9 billion in 2024 and $2.6 billion in 2023.
The heavy impairment charges are clearing the way for the sale of De Beers, possibly to a syndicate of African diamond mining countries including Botswana and Angola.
A protracted delay in executing the sale is believed to be caused by the prospective buyers waiting for the market in natural diamonds to settle after three down years.
Eirik Waerness and Isabella Mann at a De Beers event celebrating diamonds and art at Maison Assouline in London earlier this year. (Photo by Dave Benett/Getty Images)
Dave Benett/Getty Images for De Beers Group
De Beers chief economist Eirik Waerness can see indications of the natural diamond sell-off coming to an end, partly because of a decline in mine production and tough tightening profit margins for lab-grown diamond makers.
Waerness said in a Diamond Report published yesterday by De Beers that there were four key ‘dynamics’ which would shape the market for natural diamonds over the next five years.
As well as a more favorable supply/demand balance and squeezed margins in the lab-grown sector a clear differentiation between natural and lab-grown would be important as would marketing to rebuild consumer demand.
Balance Will Be Restored
“I’m confident that the balance between supply and demand in the natural diamond market will be restored,” Waerness said in the report.
“When it happens and how fast, is harder to predict but the underlying drivers of today’s disruption are well understood and, importantly, not permanent.”
This article was originally published on Forbes.com