South Africa-active Petra Diamonds has announced a delay in the sale of diamonds from its Cullinan mine in South Africa, citing the need for clarity on the impact of recent US tariffs, which have led to uncertainty in the diamond market.
The Cullinan mine is known for producing the largest-ever gem-quality diamond 120 years ago.
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The mine’s Tender 5 sales were initially set to be completed by the end of this week. Petra has chosen to defer the sales of approximately 200,000 carats until the tariff impact becomes clear.
The tariffs announced by US President Donald Trump affect a range of US imports, including diamonds, prompting a global business reassessment and sparking fears of a trade war potentially hindering economic growth, reported Reuters.
South Africa, a key diamond exporter to the US, is directly impacted by these developments.
Petra stated: “We believe this decision will lead to more supportive market prices being obtained for the Cullinan Mine goods.”
The company has already sold gems from its Finsch mine in South Africa and Williamson mine in Tanzania, before the tariffs were announced.
The Finsch and Williamson sales fetched $18m (R350.63m) for 176,000 carats, marking a 9% price increase from Tender 4.
Petra has also announced it is engaged in a restructuring plan due to increasing losses amid a prolonged downturn in the diamond market.
The company has completed a section 189 retrenchment process as part of its Business Restructuring Plan announced in December 2024. The company is finalising its life of mine reviews, aiming to right-size its cost base.
Currently, the Cullinan mine has seen a decline in high-quality diamond production, further complicating Petra’s position in the market.
The Cullinan mine has faced variability in its product mix, particularly a shortage of gem-quality stones larger than 10.8 carats, affecting revenues and average prices in previous tenders.
Excluding Cullinan mine goods, Petra’s year-to-date revenue for fiscal year 2025 (FY25) from rough diamond sales stands at $103m, down from $138m during the same period in FY24.
Despite meeting cost and capital expenditure targets for FY25, Petra is unlikely to achieve its net free cash flow generation goal due to the Cullinan mine’s poor product mix and market volatility. This outlook could change if conditions improve in the next three months.
Petra anticipates a normalisation of the product mix as fresh ore from the CC1E project at the Cullinan mine increases.
A recent 81-carat, high-quality gem discovery offers prospects for improved average prices in upcoming tenders.
In January 2025, Petra entered into an agreement to divest its entire shareholding in Tanzania’s Williamson Diamonds Limited to Pink Diamonds Investments for up to $16m (£13m).
