Petra Diamonds has confirmed the sale of its Koffiefontein to Koffiefontein Holdings, a subsidiary of Stargems Group. This move, expected to be finalised by the end of October 2024, will see Stargems take full ownership of the mine, allowing Petra to avoid the significant closure costs it had anticipated.
Strategic Exit for Petra Diamonds
The sale marks a key point in Petra Diamonds’ broader strategy to divest from non-core assets, particularly following its decision to place the Koffiefontein mine on care and maintenance in 2022. The transaction will help the company avoid between $15 million and $18 million in closure-related costs. According to Petra’s CEO, Richard Duffy, the company’s focus has been on executing a responsible exit while ensuring the continuation of economic activity at the site.
“Since taking the difficult decision to put the Koffiefontein mine on care and maintenance and planning for closure of the mine, Petra has remained committed to exploring a responsible exit of the asset,” said Duffy. “The grant of…consent by [South Africa’s] Department of Mineral and Petroleum Resources (DMPR) will allow the Koffiefontein mine to continue with economic activity under new ownership. We believe this is the best possible outcome for all stakeholders involved.”
Stargems’ Expanding Presence
This acquisition by Stargems, a Dubai-based diamond manufacturer, is the third diamond mine it has added to its portfolio since 2022. The company also purchased the Jagersfontein and Rooipoort mines, both located in South Africa. The acquisition of Koffiefontein adds to Stargems’ growing involvement in diamond mining and manufacturing.
For jewellers, Stargems’ involvement in diamond mining may influence supply chains for rough diamonds, which could impact downstream market availability.
Industry Implications
The sale of the Koffiefontein mine takes place amid a slower recovery in the global diamond market, particularly influenced by economic uncertainties in China. The deal illustrates how diamond miners are managing challenging market conditions by selling off high-cost assets. Petra’s focus on efficiency and cost management reflects wider industry trends to address fluctuating market demand.
The transfer of ownership also reflects a shift towards consolidation within the diamond mining sector, with companies like Stargems expanding their reach. Jewellers and manufacturers may want to track how this consolidation affects diamond availability, pricing, and supply in the future.
