Petra Diamonds has revealed extensive expansion plans for its key mines in South Africa, aiming to significantly boost annual production over the next few years despite ongoing uncertainties in the diamond market.
The UK-listed diamond producer, Petra Diamonds, announced during an investor day that it plans to increase production at its Finsch and Cullinan mines to between 3.4 to 3.7 million carats by 2028. This represents a substantial growth trajectory of 15% to 17% over the next three years, requiring an annual investment of approximately $100 million in sustaining and expansion capital.
Petra CEO Richard Duffy emphasized that the expansion would be self-funded, underscoring the company's commitment to financial prudence amidst market volatility. The appointment of Johan Snyman as the new CFO, effective October, adds further strategic leadership to Petra's executive team. Snyman, formerly vice-president of financial reporting at AngloGold Ashanti, will succeed Jacques Breytenbach, who announced his departure earlier this year for personal reasons.
The announcement comes at a crucial time for Petra Diamonds, which has faced challenges navigating the unpredictable diamond market. Despite recent setbacks in market conditions, including a downturn in sales reported by De Beers, Duffy remains optimistic about Petra's resilience and strategic direction.
"We have worked diligently to refine our business strategy in response to ongoing market dynamics, enhancing our ability to weather future cycles," Duffy stated.
Petra Diamonds' share prices responded positively to the news, gaining nearly 3% in early London trade. However, the company has experienced significant pressure on its valuation this year, with shares down 37% year-to-date.
Looking ahead, Petra's expansion plans underscore its confidence in the long-term prospects of its South African operations. The iconic Cullinan mine, famed for its historic discovery of the 3,106-carat Cullinan Diamond, is expected to remain operational until 2048, while the Finsch mine is projected to continue production until 2038.
As Petra Diamonds charts its course amidst market challenges, the company's strategic investments and operational enhancements aim to solidify its position in the global diamond industry, bolstering growth and sustainability in the years to come.
