PETRA Diamonds has postponed the first diamond sales of its 2025 financial year saying its decision was part of an industry-wide effort to impose supply discipline.
“Our expectation is that supply discipline, together with the expected seasonally stronger demand as we head towards the festive season, will provide some pricing support later in the calendar year,” said Richard Duffy, CEO of Petra in an announcement.
On July 25, De Beers said it had cut its full year production guidance by three million carats to between 23 and 26 million carats (previously 26–29 million carats). It said there were signs of weaker demand that was “expected to continue for some time”.
Commenting in Anglo American’s interim results, the diamond producer said midstream inventories of diamonds were expected to remain “higher than normal” partly owing to poor demand from China and the US, offset by Indian demand.
The opportunity cost of delaying the first tender is not ideal for Petra given that the company recently unveiled plans to conserve cash by cutting costs and rephasing its capital projects. But Duffy said these steps had actually enabled the tender postponement.
“Our recent steps to create a stronger balance sheet have provided us with flexibility around the timing of our tenders to respond to prevailing market conditions and we have adequate liquidity, including available and undrawn balances on our existing revolving credit facility, to fund our working capital requirements,” he said.
Having cut costs by $30m a year, Duffy forecast free cash flow (after capital and debt servicing) of $180m over the next five years assuming the low end of its diamond price forecasts. The company assumed 2025 prices of $125 to $135 per carat at Cullinan and $98 to $105m for Finsch, the South African mines. The improved cash flow would enable the company to tackle pressure on its balance sheet where net debt to Ebitda increased to 3.2x as of end-December (end-December 2022: 1.6x).
Petra said today rough diamond parcels from Petra’s South African mines, which were originally earmarked for sale in August/September as part of its first tender for the 2025 financial year, are now planned to be tendered as part of the second tender, expected to close mid-October. The schedule for Williamson’s tender remains unchanged, said Petra.
Shares in the company have shed nearly 55% year-to-date.
