Petra Diamonds expects diamond prices to stabilise later this year after the company – with two underground operations in South Africa and Tanzania and one open-pit mine in Tanzania – recorded a dip in prices received for auctions early this year.
For its sixth diamond tender conducted early this month, Petra Diamonds sold 371 104 diamond carats, bagging $44 million (R806m) at average prices of $118 per carat.
This compares to the 362 132 carats sold in April, which grossed $49m at average prices of around $136 per carat.
In the year to date, Petra Diamonds had sold 2.8 million carats of diamonds by May compared to 2.2 million carats sold in the year to May 2023.
Sales values for the year to May 2024 amounted to $329m against $316m for the year earlier contrasting period, excluding the idled Koffiefontein mine which the company intends to dispose of.
Petra Diamonds CEO Richard Duffy on Friday attributed the volume variances in between the year to date for 2023 and 2024 performances to “the deferral of certain parcels” from the year earlier period that were subsequently sold as part of the 2024 year to date.
“Our sixth tender cycle yielded $44m from the sale of 371kcts,” Duffy said.
“Like-for-like prices were marginally down through this seasonally quiet period, being 2.6% lower than Tender 5, with demand slightly muted due to Indian holidays and the continued slow recovery in the Chinese market.”
Global diamond prices have remained suppressed, prompting larger operators such as Anglo American to mull disposal of its diamond-producing unit, De Beers.
Duffy is, however, maintaining a rosy outlook of the diamond market and prices for the remainder of this year.
“We continue to see evidence of stabilisation in the market and are cautiously optimistic that demand and pricing will improve towards the end of this calendar year,” he said.
In line with this, the company was planning to undertake another diamond sales tender next month.
Duffy explained that the lower diamond prices were largely due to “seasonal weakness being evident across virtually all size” categories.
“Average like-for-like prices for the six tenders thus far in FY2024 were down 8.6% year-to-date compared to the equivalent tenders of FY2023,” he said.
Petra Diamonds has noted that the balance of price movements across tenders is due to product mix, with average prices per carat received being 13% lower than the previous tender.
Moreover, the company had also sold a 14.76-carat exceptional colour and clarity blue diamond which sold for $8.2m in its fifth tender for the current year.
Average prices from the Williamson mine in Tanzania have, however, been up by 3% in the latest tender compared to the previous one, average prices for the latest lot were “impacted by a reduced prevalence of higher-valued” single stones.
This reduced prevalence was ascribed to the mining areas currently being accessed and was expected to be temporary in nature, said the company.
BUSINESS REPORT