Story audio is generated using AI
The National Union of Mineworkers (NUM) is concerned about the payment of salaries at Petra Diamonds' Finsch mine, South Africa’s second-largest diamond mine, which was placed in business rescue in May. The union said employees had withdrawn their labour as they heard that their June salaries were not guaranteed and were calling for business rescue practitioners to secure jobs in the long run.JSE and LSE-listed Petra in May placed the Finsch mine under business rescue, citing diamond market pressures, and announced plans for a section 189 process at its flagship Cullinan mine, 40km east of Pretoria, to cut costs and improve the group’s long-term resilience. The NUM’s health and safety secretary Masibulele Naki, the union’s chief negotiator at Petra, said monthly salaries for June were at risk and service providers had not been paid. “Workers are concerned about the payment of salaries and whether they will receive their June salaries from the business,” he said. “Workers withdrew their labour after hearing news their June salaries are not guaranteed; they need to know why they should work hard if their salaries are not guaranteed.” Naki said about 1,800 jobs could be on the line at Petra, as the business rescue process would place 689 Finsch workers at risk, and the section 189 notice at Cullinan threatened roughly 1,090 workers. He said if the government did not step in, the diamond industry was at risk of a jobs bloodbath.“For as long as the government is a spectator in this process, workers will lose jobs,” he said.Petra declined to comment on questions from Business Times on the job losses.In June, Petra announced Daniel Theodorus van Jaarsveld and Luke Bernard Saffy as business rescue practitioners who would take custodianship of the Finsch mine. It also said it was suspending production after an agreement with business rescue practitioners and creditors.“This is an interim step pending the completion of the Finsch-specific business plan by the business rescue practitioners and until a way forward has been agreed upon between the business rescue practitioners and the creditors,” Petra said.Luke Saffy, business rescue practitioner, could not give details saying the statutory meetings in terms of Section 147 and 148 of the Companies Act of 2008 respectively were scheduled for Monday, June 22.“Under the circumstances it would be premature for us to give any comment until such time as these meetings have been held,” he said. The global diamond industry is under pressure amid high inventories, lower demand from luxury markets and rising competition from laboratory-grown diamonds.We are faced with an unprecedentedly weak diamond market due to global macro factors as well as the recent Middle East tensions— Petra CEO Vivek GadodiaAs a result, Petra has undertaken multiple labour restructurings since 2024 and cut board fees.The company also sold its historic Koffiefontein mine in the Free State in 2024 and exited its remaining stake in the Williamson mine in Tanzania a year later while reaching a refinancing deal with lenders to help group liquidity.Announcing the plan to place Finsch under business rescue, Petra CEO Vivek Gadodia said in May that the operating environment was difficult.”We are faced with an unprecedentedly weak diamond market due to global macro factors as well as the recent Middle East tensions," he said. “In particular, we continue to see deterioration in the value of the smaller-sized diamonds, where we do not currently expect a material near-term recovery.“ Gadodia said the group was working towards an updated business plan, which it expects to finalise in September, considering the business rescue process at the Finch mine, the section 189 process and the updated production profile.He said prices for rough diamonds were under pressure, citing the group’s April and May tender, which had yielded an average price of $81 (R1,335) a carat for Cullinan compared to $109 in the third quarter and $47 a carat at Finsch compared to $56.Naki said South Africa’s diamond mines had been reduced to three from nine after the closure of the Ekapa mine following the mudslide disaster. The remaining mines were the Finsch, Cullinan and Venetia, which is operated by De Beers. “The diamond sector is in trouble in the same way as gold in South Africa,” he said. “At some point we have to discuss the realities of the diamond industry. The issue is the downward trend in rough diamonds. This is the challenge for companies mining natural diamonds in South Africa and in Botswana.”Naki said the reality was that lab-grown diamonds were “taking up industrial space in the international market. This is where the challenge is.” A year ago, African producer countries signed the Luanda Accord, under which diamond producers contribute 1% of their yearly revenue for marketing and promoting natural diamonds in a bid to improve the demand for rough diamonds.
