A crisis forever? How diamond miners are digging in

THE impending liquidation of Ekapa Mining following a deadly mudslide last month brings the curtain down on roughly 150 years of diamond mining in Kimberley, where the junior miner was based.As a historic footnote in Kimberley’s decline, the closure of Ekapa seems emblematic of the distress in diamonds globally; a two-year slump in unpolished gems is asking existential questions of the industry’s most prominent miners.In January, De Beers cut prices for the first time since 2024, just as prices for unpolished diamonds sank to a new 12-month low. De Beers, owned by Anglo American, moved extremely reluctantly. Anglo CEO Duncan Wanblad is selling his company’s 85% stake in De Beers and had hoped for more of the green shoots he identified in August last year. Much to his irritation, the diamond market has proved “stubbornly low”, he said.His hopes for reduced production went unmet, and the price differential between lab-grown and natural diamonds has yet to yield a significant premium for certain grades of rough stones, especially the smaller ones. It might take “a few more years”, he added.These difficulties have been compounded by the whirligig of geopolitical and economic misadventure. In August, a 50% tariff placed by the US on India – where about 90% of diamonds are traded, cut or polished – was a major blow. Then came the US-Israel war on Iran.The conflict has sparked deep concerns over oil and grain supplies, and trade in critical minerals has been interrupted. The crisis extends to diamonds. Trading has stopped in Israel amid attacks on the country’s central region, where the diamond exchange is located, according to industry publication Rapaport. Wholesale conditions are seasonally quiet in the US, while in Belgium, another trading centre, global uncertainty abounds.The widening nature of the conflict in the Middle East is equally consequential. More than one billion carats in diamonds have been traded during the five years in the UAE.The growth in this trade was viewed by Wanblad as one of his “green shoots”. He said in February: “It is where the bulk of the midstream sits today, it is not only a conduit for diamonds but is also a consumer of polished goods.”Pervasive problemIn the meantime, De Beers is taking evasive action, with a restructuring at its corporate headquarters due this year. It’s hardly alone. Petra Diamonds suffered a $6m cash outflow in the first six months of its 2026 financial year even after a restructuring and recapitalisation, its second in five years.That is better than the $43m outflow of the previous year, but joint CEO Vivek Gadodia says: “What we are seeing in the diamond market is ongoing weakness, with particular pressure on the smaller-size segments of the market — smaller stones, where we believe lab-grown diamonds have now manifested as a separate purchase proposition.”Petra owns the Finsch and Cullinan mines. The latter, previously owned by De Beers, is a significant asset of deep resources and a grand legacy — it’s where the biggest diamond of all, the Star of Africa, was found.It has since been rivalled by a number of significant discoveries at Karowe, a mine in Botswana owned by Lucara Diamonds. Lucara, listed in Toronto, has recently fought off bankruptcy debt pressure following a botched underground extension project.Lucara CEO William Lamb says: “A C$165m recapitalisation in January by means of a share placement is insufficient to meet the revised project cost of $779.2m [of which $469.4m has been spent]. The company is not expected to comply with its lender covenants by the next test on July 15 unless there is additional financing.”Over the longer term, there is evidence that China’s diamond stockpiles have been mostly released. The US is also reviving. “Just generally, the economics of the product support itself,” Lamb said.Karowe and Cullinan are major assets, producing some of the world’s most esteemed gems. Lesotho’s largest diamond miner, Gem Diamonds, has laid off 240 workers — a fifth of its staff. Gem operates another glamorous asset, the wildly unpredictable Letšeng mine, where the famous 910ct Lesotho Legend was found in 2018. In September, Letšeng was written down by $10.7m.Buy when Anglo sells …?These are far from ideal conditions for Anglo to sell De Beers, a transaction it is hoping to finalise this year ahead of a merger with Teck Resources in Canada. A side issue, perhaps, but at stake is a proud record for Anglo in so far as its demerger and divestment plans have usually been a buy signal for markets.The coal market ran to record highs following the demerger of its South African thermal mines into Thungela Resources in 2020, while platinum and some other platinum group metals doubled in value just as Anglo demerged Amplats, creating Valterra Platinum. There’s no such bonanza on offer for Anglo shareholders in ridding themselves of De Beers.In February, the group reduced the carrying value of its stake in De Beers by $2.6bn. The business is now worth just $2.3bn, down from more than $5bn just two years ago, with no glittery recovery in sight.The post A crisis forever? 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