Petra Diamonds puts Finsch mine into business rescue, jobs at risk

Petra Diamonds puts Finsch mine into business rescue, jobs at risk

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London-listed Petra Diamonds has placed its Finsch Diamond Mine in South Africa’s Northern Cape under business rescue, while also beginning a retrenchment process at its Cullinan Diamond Mine, developments that could affect nearly 1,800 jobs.

The company said it initiated business rescue for Finsch after the operation continued to underperform during a prolonged downturn in the global diamond market. Petra’s chief executive, Vivek Gadodia, attributed the situation to an “unprecedentedly weak diamond market due to global macro factors as well as the recent Middle East tensions”.

Gadodia said the company is also seeing continued deterioration in the value of smaller-sized diamonds and does not expect “a material short-term recovery”. He added that weaker diamond prices and the sustained strength of the South African rand have weighed heavily on the mine’s performance.

Finsch, near Lime Acres, is described as South Africa’s second-largest diamond producer after Venetia. It has operated as an underground mine since the early 1980s using conventional sub-level caving methods. The Minerals Council of South Africa (MCSA) estimates the mine can produce about 1.8 million carats per year and still has reserves expected to last for more than two decades.

Petra also confirmed it intends to launch a Section 189A retrenchment process at Cullinan as part of wider group efforts to reduce expenditure, saying it views the move as necessary to improve long-term resilience.

In June, Petra said business rescue practitioners Daniel Theodorus van Jaarsveld and Luke Bernard Saffy were appointed to oversee Finsch. The practitioners have assumed control of the operation and are expected to prepare a business rescue plan for presentation to creditors for approval.

The National Union of Mineworkers (NUM) criticised the developments, saying the business rescue process at Finsch affects around 689 workers and the retrenchment process at Cullinan threatens about 1,090 more jobs.

NUM Petra Diamonds chief negotiator and national health and safety secretary Masibulele Naki said the union rejects claims that labour costs are to blame for the company’s financial difficulties.

“It is unacceptable for companies to continuously point fingers at labour costs whenever they face operational or financial challenges,” Naki said. “Workers are not a liability on a balance sheet; they are the creators of value and wealth in the mining industry. Without workers, there is no production, and there is no profit.”

Naki said executive remuneration, management decisions, investment strategies, market conditions and operational inefficiencies should also be considered when assessing Petra’s position.

“The narrative that labour is the highest cost to the company must be challenged. Workers should not be expected to pay the price for challenges they did not create,” he said.

NUM acknowledged the global diamond sector is under pressure from weak consumer demand, falling rough diamond prices, competition from laboratory-grown diamonds and wider economic uncertainty. However, it said these challenges should be recognised “honestly” rather than being framed mainly as a wage issue.

“Retrenchments cannot become a business strategy. Every job lost means a family pushed closer to poverty, a child whose future becomes uncertain, and a community that suffers economic decline,” Naki said.

The union has called for government intervention and urged ministers responsible for mining, energy, trade and finance to work together to protect jobs and support the industry.

“Government cannot be a spectator while nearly 1,800 workers and their families face an uncertain future,” Naki said. “Every effort must be made to preserve jobs, sustain production, and protect communities that depend on mining for their livelihoods.”

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For Zimbabwe’s mining communities, including those in Mashonaland Central where gold and other mineral operations support local employment, the situation is being watched as another sign of how shifts in global commodity markets can quickly translate into job insecurity and pressure on household incomes across the region’s extractive industries.

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