PETRA Diamonds is to close Finsch mine in South Africa’s Northern Cape after business rescue practitioners found there was no way to save the business.
As part of a five-point business rescue plan, approved by the mine’s principal creditors, it was decided there was no “viable outcome” to restart mining. “The creditors have approved the Plan to sell off the assets of Finsch in order to recover the maximum amount of value possible for Finsch’s creditors,” the company said.
Finsch will be put on a skeleton staff.
In July, Petra said it had secured R300m from a senior lender for working capital while it worked on the restructuring of its other mine, the historic Cullinan operation near Pretoria. A new business plan is expected by September that could involve retrenchments.
Cullinan is now focusing its efforts on mining from areas that are known to contain higher value stones where margins are still workable. Finsch, however, has a product mix exposed to smaller diamonds, the prices of which have been badly damaged by synthetic, lab-produced diamonds.
Pressure was piled on Petra’s balance sheet in the year ended June. Net debt increased to $322m at year-end from $298m in the third quarter. In an effort to ease some of the pain, the investor that provided working capital to Petra also agreed to defer a $6m payment in cash interest to January 2027 that was due in July.
In a business update during May, Petra’s CEO Vivek Gadodia said: “We are faced with an unprecedentedly weak diamond market, due to global macro factors as well as the recent Middle East tensions.
“In particular, we continue to see deterioration in the value of the smaller-sized diamonds where we do not expect a material, near-term recovery. Our tender results for April 2026 and May 2026 have yielded an average for Cullinan Mine of around $81/carat (compared to $109/carat in the third quarter) while Finsch averaged around $47/carat (compared to $56/carat in the third quarter).
“In addition, the sustained stronger rand has had a significant impact with no indication that this is going to change in the near future.”
Earlier this month, Anglo American CEO Duncan Wanblad acknowledged De Beers and the wider diamond industry underestimated the disruption caused by laboratory-grown gems. “Hindsight would probably show that we might have wanted to have been a little bit more aggressive on the signals we were getting,” Wanblad told the Financial Times.
Diamond markets typically rebound quickly from downturns and expectations had been set accordingly, he added.
