In addition to cost savings and retrenchments from its South African mines, Petra Diamonds was also pursuing the disposal of its interest in the Koffiefontein mine which it announced in December last year.
Diamond miner Petra Diamonds has issued retrenchment notices to employees at its South African operations as it intensifies cost-cutting measures while forging ahead with the disposal of its stake in the Koffiefontein diamond mine.
Retrenchments and lay-offs have been prevalent in the South African mining industry in the past few months as world prices for commodities such as platinum and diamonds remain suppressed.
Petra’s announcement yesterday that it had served notices of retrenchment to its employees indicates that the South African platinum sector jobs bloodbath is now extending into the diamond mining sector.
“The company’s group structure is being realigned to meet the requirements of the operations,” the company said in a statement.
“Regrettably, as a result of this group restructure, S189(3) notices (proposed retrenchments) under the South African Labour Regulations Act (LRA) have been issued to all group employees to commence consultations around affected roles.”
At the Finsch mine, Petra Diamonds has proposed a revision of throughput tonnages from 2.8 to 2.2 million tons per year and will be reviewing its “current continuous operations shift” configuration.
It has also issued notices under the LRA to affected employees while consultations with organised labour have commenced.
At the Cullinan mine, Petra Diamonds’ cost-cutting initiatives had been kick-started, although the company was still working on currently planned throughput tonnages.
These measures were collectively expected to “deliver in excess of $30 million (R558m) of sustainable annualised operating cost savings” from 2025 onwards, the company said.
Petra Diamonds CEO Richard Duffy explained they they were putting in place these measures as a way of building up the resilience of its business.
“We remain on track to deliver the $75m of cash savings in full year 2024 as a result of capital deferrals and cost savings of circa $10m,” Duffy said.
“This cost rebase will align our group support structures with our more streamlined operational requirements and transition Petra to a more smoothed capital profile to enable sustainable net free cash flow generation, notwithstanding the continued slower recovery of the diamond market as a result of ongoing economic uncertainty and weakness in China.”
In line with this, Petra Diamonds was due to issue a revised update to its life of mine plans as it transitioned to a “more smoothed capital profile”.
In addition to cost savings and retrenchments from its South African mines, Petra Diamonds was also pursuing the disposal of its interest in the Koffiefontein mine which it announced in December last year.
Petra Diamonds yesterday said that it had now entered into a definitive transaction agreement with affiliates of the Stargems diamond group (Stargems) for the disposal of its stake in the South African diamond mine.
Stargems has a significant global presence in the diamond and jewellery industry and also owns and operates other diamonds mines in South Africa.
On completion of the transaction, Petra will transfer its stake in the entity that owns the mine to Stargems for a nominal cash consideration and will no longer be responsible for its environmental rehabilitation liabilities and care and maintenance costs.
Petra Diamonds made provisions totalling $23.1m for liabilities, costs and commitments associated with the Koffiefontein mine in its interim results for the 2024 first half-year period.
The company will, however, remain liable for funding certain ongoing social commitments relating to Koffiefontein that were made during its ownership.
“Completion of the sale is subject to obtaining the consent of the Department of Mineral Resources and Energy in accordance with section 11 of South Africa’s Mineral and Petroleum Resources Development Act,” the company said.
“Petra will provide further updates on the progress of completing the sale in due course.”
BUSINESS REPORT