Focus on

diamond mining

A miner walking alongside a feed belt at Petra’s Cullinan mine in South Africa.



As the fallout from the financial crisis instigated by the COVID-19 epidemic has yet to settle, it appears that one of the first major casualties could be a mining company. Following a strategic review into its capital structure options, Petra Diamonds announced on June 26 that it is now seeking offers for the company or for other assets.

It began the strategic review of its capital structure options on March 27, to explore the options available to it to settle an outstanding senior secured loan note of $650 million, which is due for repayment by May 1, 2022. Its loan notes are listed on the global exchange market of the Irish Stock Exchange.

In its statement, Petra said that it had appointed the consultancy firm Rothschild & Co. to facilitate the proposals, but confirmed that as of yet it had not received any offers – neither for the company as a whole or for any one of its assets.

There had been consistent reports about Petra’s financial stability prior to the outbreak of the global pandemic, with company struggling to pay off up debt accrued in an attempt to expand its iconic Cullinan mine in South Africa, where the world’s largest-ever diamond was found in 1905. In September last year, it reported a 22 percent drop in fiscal year profit, largely as a result of falling diamond prices

But the COVID-19 crisis, which forced a shutdown of its operations, clearly had exacerbated the mining company’s situation. In its most recent financial report, which covered results for the quarter ended March 31, it showed a fall of revenues of revenue of 32 percent, which it attributed in part to weak sales at its March tender.



Petra has always been an interesting player in the rough diamond mining arena. Founded in 1997 as an exploration company by Adonis Pouroulis, a South African entrepreneur, it was first listed on the london Alternative Investment Market later that year, transferring to the LSE Main Market in December 2011.

The company transitioned from a junior miner to a major independent producer when it started buying up old De Beers assets, first in South Africa, but later elsewhere in Africa. In 2007 it purchased the Koffiefontein mine in northwestern South Africa, which has been in operation since 1870.

Petra would eventually come to hold interests in eight producing mines in South Africa and Tanzania, and also run an exploration program in Botswana.

Drilling underground at the Koffiefontein mine in South Africa.

The most well-known of its assets is Cullinan Mine, which Petra came to control in July 2008, after leading a consortium which acquired the facility from De Beers Consolidated Mines for 1 billion South African rand.

Previously known as the Premier Diamond mine, it produced many of the world’s largest and most famous diamonds, including the Cullinan Diamond, which at 3,106 carats still hold the record for the largest rough gem diamond ever discovered.

After the purchase by Petra and the renaming of the mine, Cullinan continued to produce large stones, including the the Cullinan Heritage, a 507-carat white diamond, which was discovered in September 2009. It was the 19th largest uncut diamond ever discovered and was sold in February 2010 to Chow Tai Fook Jewellery for $35.5 million, the highest price ever paid for an uncut diamond.

A 424.89 carat D-Color Type II diamond recovered at Petra’s Cullinan mine  on March 29, 2019.


Petra is not the only diamond mining to have found itself in trouble since the onset of the COVID-19 epidemic. In April, Canada’s Dominion Diamond Mines, which is the operator of the Ekati and Diavik mines, announced that it and certain of its affiliates have filed for bankruptcy protection.

“Although the company has strong diamond inventory, sorting houses and diamond markets are closed, Dominion noted. “These are key channels to facilitate the sale of the company’s inventory, so currently there is no ability to generate sufficient revenue to support Dominion’s ongoing financial obligations.”

“Given the rapidly evolving environment and uncertainty of the scope and duration of the restrictions and health and safety concerns associated with the COVID-19 pandemic, along with market dislocation and the continued capital calls from the Diavik joint venture, the company believes filing for protection under the CCAA (Companies’ Creditors Arrangement Act) is the most prudent course of action,” the statement continued.

But Dominion’s prospects as an independent venture appeared better than Petra’s. At the time the company said it received and is considering a proposal from an affiliate of the Washington Companies, its current equity owner, to provide debtor-in-possession financing, which would help provide sufficient liquidity through the bankruptcy process.

Dominion released a statement to employees on June 26, saying that it expected full operations to be resumed during the fourth quarter of 2020. Its Ekati mine has been shut down in mid-March on health and safety grounds, but the Diavik mine continued to operate.