Blue diamond found by struggling Petra sold for $14.9 million
South Africa’s Petra Diamonds (LON:PDL) has sold a 20.08-carat blue precious rock it found in September at its iconic Cullinan mine for $14.9 million, or about $741,000 per carat, which is the highest price analysts had predicted.
The “exceptional” blue gem quality diamond, Type IIb, was acquired by a “leading diamond company” that wishes to remain anonymous, Petra said.
“We are very pleased with this result which is in line with our expectations and confirms the resilience in the value of very high quality blue diamonds, undoubtedly one of nature’s rarest treasures,” CEO Richard Duffy said. “We look forward to following this exceptional stone’s journey to its polished form.”
Petra has been trying to turn around its fortunes after piling up debt to expand Cullinan, where the world’s largest-ever diamond was found in 1905. That rock was cut into two stones – the First Star of Africa and the Second Star of Africa – and are now part of Britain’s Crown Jewels, held in the Tower of London.
The company’s share price collapsed to a record low amid falling diamond prices that forced it to write down the value of its mines in September by almost $250 million.
The financial struggles prompted the company to launch a restructuring that ended Friday with a number of organizational changes. Among them, Petra said it had removed the chief operating officer role, which meant Luctor Rode was no longer with the company.
Duffy said all mines would report directly to him from now on.
In the same boat
Petra is just one of the many diamond miners hit by ongoing market weakness that has hit producers of small stones hardest, due to an oversupply in that segment.
Increasing demand for synthetic diamonds has also weighed on prices. Man-made diamonds require less investment than mining natural stones and can offer more attractive margins.
Buyers, those that polish and cut diamonds for retailers, have been hit this year by lower prices and tighter credit, prompting them to delay purchases.
Tiffany’s reported in August a 3% decline in like-for-like sales, while shares in Signet, the world’s largest retailer of diamond jewellery, have lost more than 60% of their value this year.
De Beers, the world’s No.1 diamond miner by value, has responded by axing production — with a target of 31 million carats this year compared with 35.3 million in 2018. It has also given buyers more room to maneuver, by allowing them to refuse half the stones in many of the diamond parcels.
As a result, De Beers was able to sell this month the most diamonds since June, though sales so far this year are down more than $1.2 billion from the same time in 2018.