Home News Gem Diamonds Faces Loss Amidst Declining Large Stone Production

Gem Diamonds Faces Loss Amidst Declining Large Stone Production

by Madonna

London-based Gem Diamonds has reported a loss in the first half of 2023, citing market deceleration and a decline in the production of large stones as primary factors impacting the company’s average price and overall profitability.

For the six months ending June 30, Gem Diamonds disclosed a loss attributable to shareholders amounting to $1 million. This marked a significant downturn compared to a profit of $3.8 million during the same period the previous year. Profit after tax also saw a sharp decline, plummeting to $1.5 million from $8.3 million the year before. Furthermore, the company’s revenue experienced a substantial drop, falling by 28% to $71.8 million.


Gem Diamonds attributed the decline in performance to weak demand and pricing for its high-value Letšeng mine in Lesotho, where sales volumes dwindled by 9% to 52,163 carats. The average price per carat also suffered, dipping by 21% to $1,373.


The company noted, “A decrease in the number of large, high-value diamonds recovered, combined with market pressure, has negatively impacted the average dollar per carat and revenue achieved during the period.”


In comparison to the previous year, Gem Diamonds retrieved two diamonds weighing over 100 carats, down from three. The total number of rough stones weighing more than 10 carats extracted from the deposit also decreased from 374 in the first half of 2022 to 318 during the same period in 2023.

The production figures for the first half revealed an 8% decrease to 50,601 carats due to reduced ore processing volume. The company terminated a contract with an external vendor that had previously processed 400,000 tonnes of ore for Gem Diamonds in the prior year. Additionally, heightened power outages caused by load shedding from South African electricity provider Eskom further hampered production. In the reported period, Letšeng experienced 180 days of load shedding, compared to 205 days in the entirety of 2022.

CEO of Gem Diamonds, Clifford Elphick, acknowledged the challenging environment, stating, “The downturn in the rough-diamond market, together with increased grid electricity interruptions, which increased operating costs, negatively impacted our financial results for the period.” He added, “Our focus remains on stabilizing our plants to improve large diamond recoveries and to critically review all operational and capital expenditure.”

As part of this strategic assessment, Gem Diamonds appointed Motooane Thinyane as the new CEO of Letšeng, replacing Kelebone Leisanyane. Gideon Scheepers, formerly the general manager of Lucapa’s Mothae mine in Lesotho, has been appointed as the head of operations for the Letšeng deposit, taking over from Thinyane.


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