Petra says buyer may save SA’s historic Koffiefontein mine

THE historic Koffiefontein diamond mine in South Africa’s Free State province could be granted a new lease on life after owner, the UK-listed Petra Diamonds said it was in negotiations with a potential buyer.

Mining was opened at Koffiefontein in 1870. It was sold by De Beers to Petra Diamonds in 2007, but placed on care and maintenance by Petra in late 2022.

Petra said on Wednesday it had entered into a non-binding term sheet on an exclusive basis with “an interested party” for the potential sale. It added however that if the parties were unable to agree definitive terms it intended to proceed with closure. 

“We are mindful of our obligations towards our stakeholders at Koffiefontein when considering a potential sale,” said Richard Duffy, CEO of Petra. Petra would continue to work with the South African government and other stakeholders, he added.

Despite its operational history, Koffiefontein is not exhausted. According to a June 2021 assessment, it has a gross resource base of 5.25 million carats including 1.11 million carats in the indicated resource category accessible through underground mining. Petra said previously that “it may be feasible for another owner to extend the mine’s life”.

The diamond market fell under severe pressure this year as the midstream sought to destock goods and as demand faded amid sluggish global economic growth.

Commenting earlier this week, Duffy said diamond prices “have likely bottomed”. This was after the company reported a 20% increase in like-for-like prices for the third tender of its 2024 financial year.

“We believe actions taken by major producers to curb supply and the two-month Indian moratorium that comes to an end on 15 December 2023, together with strengthened retail sales in the US, have improved market conditions as inventory levels across the pipeline rebalance,” said Duffy.

He called for “ongoing discipline” by major producers to provide price stability in the 2024 calendar year.