Mining Sell-Off Highlights Sector’s Woes

(diamonds.net) - Just as the sun emerged from behind the clouds and diamond demand began to recover from a glut in the manufacturing sector, the coronavirus pandemic hit. Its rapid spread forced many miners to shut down temporarily and prevented them from selling their rough. This left several companies on extended care-and-maintenance plans for the foreseeable future, and led some heavyweights to announce that they could no longer support their operations due to the burden of their debt. Dominion Diamond Mines, which owns the Ekati deposit in Canada as well as 40% of the Diavik mine, agreed to a sale of its assets in May in an effort to avoid bankruptcy. Last month, Petra Diamonds announced it was considering all options available under its mounting debt, including selling the company. Meanwhile, Firestone Diamonds has decided to keep its Liqhobong mine in Lesotho shut for a minimum of one year, and Lucapa Diamond Company mothballed its Mothae mine — also in Lesotho — in April so it could focus on its higher-yielding Lulo deposit in Angola. Given any other scenario, most miners would jump at the chance to purchase some of Petra’s assets. Its Cullinan and Finsch mines in South Africa are world-class resources, according to analysts. However, the same weak market that’s forcing some miners into selling their operations will likely prevent others from buying.