Petra faces more than 1,700 job cuts as diamond market crashes

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The National Union of Mineworkers (NUM) has called for urgent government intervention after London-listed Petra Diamonds placed its struggling Finsch mine under business rescue and launched a retrenchment process at its Cullinan mine, putting more than 1,700 jobs at risk.In a business update on May 29, Petra Diamonds CEO Vivek Gadodia said the company is faced with an “unprecedentedly weak diamond market due to global macro factors as well as the recent Middle East tensions”. “In particular, we continue to see deterioration in the value of the smaller-sized diamonds, where we do not currently expect a material short-term recovery. “Given the continued underperformance of the Finsch mine, largely due to the lower prices achieved for its goods and the sustained stronger rand … Finsch Diamond Mine has decided to commence a business rescue process.” Regarding the Cullinan Diamond Mine, the company also announced “its intention to launch a process contemplated in section 189A of the South African Labour Relations Act [dealing with retrenchments] as a way of reducing expenditure at the Cullinan mine and the rest of the group. We believe this is a necessary step to improve the long-term resilience of the group.”The overall mining sector contributes about 6.1% (R477bn) to national GDP and employs about 470,000 people. In another business update on June 10, Petra Diamonds said Daniel Theodorus van Jaarsveld and Luke Bernard Saffy had been appointed as business rescue practitioners (BRPs) for the Finsch mine.The BRPs have taken over the “custodianship of the mine and will now begin executing all the legal requirements under the business rescue process, including the formulation of a Finsch-specific business plan that they will put forward to the creditors for voting”. Masibulele Naki, the NUM’s chief negotiator at Petra Diamonds, said the union condemns the company’s decision to place the Finsch operation in Kimberley under business rescue and to “issue a section 189A notice at the Cullinan Diamond Mine”. “The business rescue process at Finsch places about 689 workers in a state of uncertainty, while the section 189A notice at Cullinan threatens the jobs of roughly 1,090 workers. Together, these developments place nearly 1,800 livelihoods at risk and threaten the economic stability of the mining communities that depend on these operations,” Naki said. “NUM vehemently rejects any attempt to place the burden of business challenges on workers, who have continued to contribute to the profitability and sustainability of the company through their labour, sacrifice, commitment, and productivity over many years.” In 2024, the NUM signed a five-year wage deal with Petra Diamonds for increases of 6.25% in the first year, 5.75% in the second and third years, and 6.5% in the fourth and final years. “It is unacceptable for companies to continuously point fingers at labour costs whenever they face operational or financial challenges. 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. The NUM acknowledged that the global diamond industry faces significant market pressures, including weaker consumer demand, declining rough diamond prices, increased competition from laboratory-grown diamonds and broader economic uncertainties. “However, these realities must be acknowledged honestly, instead of creating an impression that workers’ wages are the primary cause of the company’s financial difficulties. “NUM calls upon the minister of mineral & petroleum resources, the chief inspector of mines, the minister of electricity & energy, the minister of trade, industry & competition, and the National Treasury to urgently convene a multi-stakeholder intervention to safeguard jobs, sustain investment and secure the future of these operations,” Naki said. “The government cannot be a spectator while nearly 1,800 workers and their families face an uncertain future. The mining industry remains one of the pillars of our economy, and every effort must be made to preserve jobs, sustain production and protect communities that depend on mining for their livelihoods.” Contacted for comment, mineral & petroleum resources minister Gwede Mantashe said: “The government can’t stop the depletion of diamonds underground. The section 189 process is for the union to engage the company. They [the NUM] can talk to us, but they must not invest in government intervening on their behalf.”Naki said: “The NUM will not stand by while thousands of workers face uncertainty. We shall use every legal, organisational and collective bargaining mechanism available to defend jobs, protect workers’ rights and ensure that workers’ voices are heard throughout these processes.”