Dubai’s Stargems Group has acquired the Koffiefontein diamond mine from Petra Diamonds, marking its third mine purchase in South Africa.
This transaction, pending approval from South Africa’s Department of Mineral Resources and Energy, sees Stargems taking on significant responsibilities, including environmental rehabilitation liabilities and the mine’s maintenance costs, previously amounting to $23.1 million for Petra.
Acquisition Details
Under the terms of the sale, Stargems will provide Petra Diamonds with a “nominal cash consideration”, in addition to assuming the aforementioned financial responsibilities. This move is part of Petra Diamonds’ broader strategy to reduce its operational costs, with the company aiming for annual savings exceeding $30 million across its operations.
“Since taking the decision to close Koffiefontein, Petra has remained committed to also exploring a responsible exit in consultation with its stakeholders,” expressed Petra CEO Richard Duffy. “I am pleased that the sale agreement reached with Stargems will, once completed, provide ongoing economic activity in the region. We believe Stargems has the technical and financial capability to conduct operations in a responsible manner for all stakeholders. As a result of this transaction, Petra will avoid incurring closure-related costs of $15 million to $18 million.”
Industry Implications
This acquisition reflects Stargems’ strategy to extend its influence within the diamond supply chain, following its purchase of two other South African mines in 2022. For Petra Diamonds, this sale is part of an extensive cost-saving initiative, including reducing throughput tonnes at the Finsch mine and aiming for $75 million in cash savings for the 2024 financial year, extending to over $30 million per annum in sustainable savings across its South African operations, centralised services, and overheads for FY 2025.
