Gem Diamonds Incurs First-Half Loss

RAPAPORT… Gem Diamonds fell into the red in the first half of 2020 as the coronavirus crisis froze the rough market and restricted the company’s sales.

The net loss of $113,000 — compared with a $9.7 million profit a year earlier — resulted from a 24% slump in revenue to $69.5 million for the six months. The cost of sales declined 16% year on year to $49.9 million, the company reported Thursday.

“The sudden onset of the Covid-19 pandemic resulted in immediate downward pressure on prices achieved for the [second and third of three] tenders held in the period,” the miner explained. Many clients were unable to attend viewings, with the company displaying the goods through virtual formats and introducing other flexible processes, it added.

The company also had less rough available to sell because of a shutdown at its Letšeng mine in Lesotho. Production fell 24% to 43,275 carats for the period.

However, Gem Diamonds predicted a recovery in the “medium to long term” as demand grows — especially in emerging markets such as China and India — and supply dwindles.

“This dynamic is expected to benefit high-quality diamonds in particular, where shortages of certain categories of these rough diamonds have already been seen during the period,” the company noted.

Image: The Letšeng mine. (Gem Diamonds)