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Petra Diamonds halts all mines in South Africa due to power issues

Petra has abandoned plans to sell the business in favour of a debt-for-equity restructuring. (Image of Koffiefontein mine. Courtesy of Petra Diamonds.)

Struggling Petra Diamonds (LON:PDL) has had to suspend operations at all of its mines in South Africa after Eskom, the country’s electricity utility, declared a power system emergency and asked the miner to reduce its electricity load.

For six consecutive days, Eskom has been forced to implement rotational load shedding — a South African term for planned power cuts — as a mean of averting a nationwide blackout. Today, however, is the first time it moves to Stage 6 load shedding, scheduled from 6pm local time onwards.

Interruption of electricity supply had, until now, only been implemented up to stage 4. Stage 6 allows for up to 6,000MW to be shed from the national grid, equivalent to about 12% of Eskom’s nominal total capacity. 

The move, said the utility, follows a technical problem at Medupi Power Station impacting additional generation supply.

Eskom, the country’s electricity utility declared a power system emergency and an unprecedented move to Stage 6 load shedding

Production, hoisting and processing have stopped immediately at Cullinan, Finsch and Koffiefontein mines, Petra said.

The miner noted that it was in the process of removing all underground workers, except those required for essential services, with only pumping to prevent flooding and ventilation.

Petra said it would update the market as soon as it receives further notification as to how long the load cut will last, and what impact the issue was likely to have on its production performance.

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.

Courtesy of Eskom.

The financial struggles prompted the company to launch a restructuring that ended in November with a number of organizational changes.

Petra is just one of the many diamond miners hit by ongoing market weakness that has affected producers of small stones hardest, due to an oversupply in that segment.

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