Petra Diamonds warns of coronavirus hit as retail stores close
JOHANNESBURG - Petra Diamonds warned the coronavirus outbreak had hurt demand in the diamond market as stores were forced to close during the important Lunar New Year period in China, delaying the miner’s debt reduction initiative.
The company said the impact of the fast-spreading virus would cause delays in Project 2022, its debt reduction program launched last year. The miner also cut its cash flow target to between $100 million and $150 million by June 2022, from its earlier range of $150 million to $200 million.
The virus outbreak is seen as a new threat to the diamond industry which has already been hit by lower demand from China, the world’s second largest market after the United States, following a prolonged U.S.-China trade war and the Hong Kong protests.
Coronavirus-related fears have also prompted the world’s largest diamond mining company, Alrosa to shift its diamond auctions from Hong Kong to elsewhere.
Petra said the outbreak impacted consumer spending around the Lunar New Year and had a short-term effect on diamond trading, travel and retail in some of the Asian markets and further afield.
“Activity across the diamond pipeline is therefore expected to reduce until the virus is brought under control,” the company said and added operational cash flow benefits had been eroded.
Petra said the virus outbreak in China resulted in a shutdown of retail stores and the subsequent postponement of the Hong Kong International Diamond, Gem and Pearl show.
The company also reported a 11% fall in core earnings for the first half, but backed its full-year production outlook.