Editor’s Note
This article highlights the harsh economic realities facing even producers of the world’s most valuable diamonds. As global demand weakens, operational cuts and workforce reductions are becoming unavoidable strategies for survival, underscoring the commodity sector’s vulnerability to market fluctuations.
Lesotho’s largest diamond mine has laid off 240 workers – a fifth of its staff – as plummeting gem prices and weak global demand force cost-cutting measures, Reuters reported on Thursday.
The Letseng mine, operated by Gem Diamonds, dismissed the workers after revising its operational plans to combat persistently low diamond values. The facility produces some of the world’s most valuable gems, including the famous 910-carat “Lesotho Legend.”
Gem Diamond CEO Clifford Elphick was quoted as saying.
The redundancies represent a significant blow to Lesotho’s economy, where diamonds contribute up to 10% of gross domestic product and provide employment for thousands in the nation of just over two million people. Diamonds rank among the country’s major exports alongside textiles and clothing.
Gem Diamonds reported a half-year loss of $11.7m, a sharp reversal from the previous year’s $2.1m profit, after revenue plummeted 42%. The company also recorded a $10.7m write-down on Letseng’s value due to weak market conditions, Reuters said.
Average diamond prices fell to $1,008 per carat during the six months to June, representing a 26% decline from the previous year. Production also dropped from 55,873 carats to 47,125 carats over the same period, said Reuters.
Industry-wide, diamond prices have tumbled approximately 35% from early 2022 peaks, according to the Zimnisky Global Rough Diamond Price Index, driven by changing consumer preferences and competition from laboratory-grown alternatives. Mining companies have responded with output cuts, job losses and project suspensions.