News

December 04, 2008

Diamonds Aren’t Forever, At Least Not Today

By Alastair Ford

Who’d be in diamonds right now? Martin Rappaport’s weekly diamond industry newswire continues to report weakening consumer demand from across the board in the US retail market, and there’s no doubt whatsoever that that weakened demand has fed through to the supply side. Among the most recent indicators of sector slowdown, Petra Diamonds is considering putting two of its South African fissure mines on care and maintenance, Kopane has shut down production operations on its Satelite pipe in Lesotho, BHP Billiton has pulled out of a diamond exploration joint venture with Mwana Africa in the Democratic Republic of Congo, Vaaldiam has shut down operations at its Duas Barras mine in Brazil, Diamonex’s new mine in Botswana has missed financial expectations by some margin, and Standard & Poor’s has downgraded Alrosa’s credit rating to BB-. Also boding ill for the wider sector, Alan Bond’s gang appear to have shuffled off the scene at the Kao pipe in Lesotho, and Lukas Lundin’s Lucara has also gone quiet down in that part of the world. Meanwhile, Kimcor has offloaded the moribund South African assets it bought from Dwyka Diamonds onto some other unlucky punter, and both Gem Diamonds and Rockwell have cancelled planned diamond sales, due originally for December.

Gem has also recently put its Cempaka Indonesian alluvial mine onto care and maintenance, although the problem with Cempaka has always been that each new owner has brought in a correspondingly new interpretation of its geological structure, which is then used to overturn the old mining methods and muddy all the waters. Needless to say, neither the earlier, nor the later approaches have every really worked with optimum success, which is why the mine keeps changing hands, and why now, after a...