Petra Diamonds revenue falls but glimmers of hope remain
Precious stone miner Petra Diamonds said that its revenue fell six per cent in the first half of the financial year due to slowing demand in Asian markets.
The firm sold 1.7m carats for $193.9m (£148.5m) in the period, compared to $207.1m in the same period in 2019.
Anti-government protests in Hong Kong, as well as the fallout from the US-China trade war, both had a negative impact on sales.
Petra’s shares fell 10 per cent in the morning’s trading.
Petra, which owns four mines across South Africa and Tanzania, said that a combination of lower prices and an “adverse product mix” at Finsch and Williamson mines, was responsible for the drop.
Despite a slow start, the firm said that the second quarter had seen a rise in demand, with rough diamond pricing reflecting this with a modest increase.
The miner added it is on track to meet or exceed its full-year production outlook of about 3.8 million carats.
November’s sale of a 20 carat blue diamond found at South Africa’s famous Cullinan mine for $14.9m (£11.49m) was a bright spot in a slow half for the firm.
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Despite being equivalent to about $741,000 per carat, the sale was not enough to offset lower prices from other goods.
In addition, Petra said that project 2022, its attempt to deliver $150-200m in free cash flow from 2019 to 2022, was “progressing well”.
Chief executive Richard Duffy said: “I am very pleased with the progress made in implementing Project 2022 across our operations and at corporate level.
The buy in to this project from all of our Petra employees and contractors has supported the strong operational performance across all sites, resulting in us achieving our highest level of ROM tonnes mined and carats recovered over the last six months, and has positioned us to meet or exceed full year guidance.
“It is also encouraging that rough diamond pricing has modestly improved moving into our third quarter. The health of the market will depend on continued supply discipline from the majors as well as macro-economic conditions.”
The diamond market has been under pressure lately due to a combination of oversupply, ongoing trade tensions and increased sales of lab-grown diamonds all responsible for a decline in sales.