Petra Diamonds cuts costs by $30m, extends life of SA mines

A conveyor feeding the tailings thrower at the Cullinan Diamond mine. SUPPLIED.

A conveyor feeding the tailings thrower at the Cullinan Diamond mine. SUPPLIED.

Published Jun 28, 2024


Petra Diamonds, which has appointed a new chief financial officer, is extending the life of its South African mines after scaling back operating costs by $30 million (more than R550m) from 2025 onwards.

Earlier this month, Petra Diamonds and the National Union of Mineworkers (NUM) inked a five-year wage agreement, effective from next month, giving employees at the diamond miner above-inflation salary increases.

The company, which operates Finsch and Cullinan diamond mines in Mpumalanga, as well as the Williamson mine in Tanzania, has now instituted “sustainable reduction in operating costs of $30m per annum from its 2025 full year” after outlaying “total capital (mainly for) development and sustaining capital to $100m per annum” at its South African operations.

The Cullinan mine now has a life-of-mine potential to the 2048 financial year, with a “new shaft for D-Cut not required before 2035” and subject to further studies. The life-of-mine for Finsch now also has potential to last till 2038.

The approved life-of-mine extension projects for the South African mines are expected “to be self-funded”, with production expected to grow to over 3.4 million carats by 2028.

“We have worked hard to deliver an updated business profile in response to ongoing market challenges and to further enhance our resilience to future market and capital cycles,” said chief executive Richard Duffy.

Duffy added that the company had come up with a “de-risked production profile focused on sustainable cash generation” after the reduction of costs by $30m per year from next year.

Through deliverance of a “smoothed capital programme, self-funded until at least the early 2030s”, the company hopes to “provide a compelling value proposition, while positioning for a successful refinancing of our 2026” finance notes.

Meanwhile, Petra Diamonds also announced the appointment of Johan Snyman as chief financial officer from October, replacing Jacques Breytenbach, who will be stepping down from the position as well as from the post of director for the company at the end of September.

Snyman joined Petra Diamonds at the beginning of this year as group financial controller after leaving his post as vice president for group financial reporting at AngloGold Ashanti.

“Johan has made significant contributions to Petra since joining in January and I look forward to working with him in his new role,” said Duffy.

In the outlook, Petra Diamonds expects diamonds from Cullinan to fetch between $125 and $135 per carat, while those from Finsch are projected to earn the company between $98 and $105 per carat.

Diamonds from Williamson mine are expected to be priced higher at between $200 and $225 per carat.

Petra Diamonds said last month that it had struck a long-term deal for the supply of renewable energy to its South African diamond mines as it seeks to secure sustainable power supply for its operations.

With South African miners susceptible to production disruptions from electricity load shedding by Eskom, Petra Diamonds has turned to independent renewable energy suppliers while also helping to curb emissions from operations.