Diamond miners are responding to the Covid-19 pandemic in many ways – from cancelling scheduled sights to temporarily closing mines, scaling down operations and providing flexibility to long-term buyers.
The companies also acknowledge the potentially devastating impact of the virus on the diamond business moving forward, starting with weaker demand, plummeting diamond prices, and disruptions in mining and production.
Here are some updates on the diamond mining business as the world battles the global spread of Covid-19.
Petra Diamonds Ltd
Petra is limiting its South African operations to a minimum in accordance with the government’s lockdown directives, which are in effect until April 16, 2020, while its open-pit Williamson mine, remotely located in the Shinyanga province in Tanzania, remains fully operational.
All mines are being monitored and managed according to new health and safety protocols.
Diamond sales were likewise affected. Citing rapidly deteriorating market conditions due to travel restrictions, and factory and retail shop closures, Petra cut short its fifth diamond sale in March.
The miner said it witnessed “severely depressed and opportunistic bidding,” particularly for its larger-sized and higher-quality goods. Prices meanwhile dipped by about 24 per cent on a like-for-like basis compared to the February 2020 sales cycle.
Petra’s scheduled sales in May and June will depend on prevailing travel and export conditions.
The company also suspended its FY 2020 production guidance of 3.8 million carats.
Richard Duffy, CEO of Petra Diamonds, commented, “The scaled down mining operations and sales disruptions will cause a negative impact in the short-term. However, we have the foundations in place to continue to deliver long-term, sustainable operations.”
Lucara Diamond Corp
Lucara’s 100 per cent-owned Karowe diamond mine in Botswana is completely operational, subject to travel restrictions, reduced staff and social distancing.
The government of Botswana also temporarily allowed Lucara to hold diamond sales in Antwerp, Belgium since the miner won’t be able to hold local tenders due to travel constraints.
The company is likewise putting on hold its 2020 guidance.
According to President and CEO Eira Thomas, the full impact of Covid-19 on its business remains uncertain despite the Karowe’s continued operations and first quarter sales achieving expected results, but its “longer-term outlook for the diamond market remains positive,” based on improving supply-demand fundamentals in late 2019, prior to the Covid-19 crisis.
Diamond sales also continue through Clara, Lucara’s web-based digital sales platform.
Gem Diamonds Ltd
Gem Diamonds Ltd has temporarily placed the Letšeng mine in Lesotho, South Africa on care and maintenance until April 21, in accordance with a nationwide lockdown.
The company also announced greater flexibility in diamond sales during the lockdown period.
Gem Diamonds said its first and second round of sales of large high-quality diamonds raised US$12.1 million and US$6.7 million, respectively.
The “flexible tender sales” process was put in place after its March diamond tender was cancelled due to virus-induced travel restrictions.
Lucapa Diamond Company Ltd
Business at the Lulo diamond mine in Angola, Central Africa has been scaled down to essential operations, following a National State of Emergency declaration, which will be in force until April 11, 2020.
The lockdown measures allow certain industrial activities to continue, including mining, but Lucapa decided to limit activities on the mines with camp-based staff.
Russian miner Alrosa announced on its Instagram page that it will allow long-term clients to defer 100 per cent of their allocated purchases in April to later this year.
“The spread of coronavirus and counter-pandemic measures implemented around the globe have severely affected the diamond industry,” the miner said. “Alrosa supports its long-term clients with a full flexibility for the April 2020 trading session, lifting mandatory buyout requirements.”
De Beers Group
De Beers Group cancelled its third sales cycle of 2020 scheduled for April “due to the public health restrictions on the movement of people and product in Botswana, South Africa and India, which prohibit customers from traveling and prevent the shipment of goods to customers’ international operations.”
De Beers also announced that Sightholders will be allowed to defer 100 per cent of their Sight 3 allocations to later in the year.
"We will continue to seek innovative ways to meet Sightholders’ rough diamond supply needs in the coming weeks," it added.
Dominion Diamond Mines ULC
Dominion Diamond has suspended operations at the Ekati diamond mine in Canada. A small crew remain stationed at the mine for maintenance.
“There is currently no timeline established for this period of suspended operations. Dominion will provide updates on future developments as they become available,” the company said.
Rio Tinto CEO J-S Jacques said most of Rio Tinto’s assets continue to operate amid the pandemic. The miner also pledged a further US$25 million to support global grassroots community preparedness and recovery initiatives.
Rio Tinto also put in place commercial teams in key locations for business continuity and customer support. Its business resilience teams at each site and region are tasked to keep operations running safely, enable commercial supply chain continuity and plan for future eventualities under various scenarios.
The majority of Rio Tinto’s employees work onsite, so the company has implemented various protocols including travel restrictions, social distancing, increased personal hygiene, employee support and enhanced leadership presence onsite.
Mountain Province Diamonds Inc
Mountain Province Diamonds withdrew all guidance metrics on account of the virus’s potential impact on 2020 sales.
In March, the company postponed its third sale of 2020 after Antwerp announced a city-wide lockdown. Future sales could also be put on hold, it said, adding that it is considering alternative sales methods.
Mountain Province Diamonds operates the Gahcho Kué diamond mine in Canada in partnership with De Beers Canada.
Mountain Province President and CEO Stuart Brown commented, “Together with De Beers Canada and our stakeholders, we are assessing a range of mitigating actions. We are also taking all the necessary precautions to protect the mine site. We will be monitoring the situation very closely and update the market accordingly.”