Second-biggest mine of its kind enters business rescue in South Africa
London-listed Petra Diamonds has placed its Finsch Diamond Mine in the Northern Cape under business rescue and started a retrenchment process at its Cullinan mine, putting nearly 1,800 jobs at risk.
This has drawn strong backlash from the National Union of Mineworkers (NUM), which has called for the government to intervene.
Petra announced at the end of May that it would begin business rescue proceedings for Finsch after the operation continued to underperform amid a prolonged downturn in the global diamond market.
Petra Diamonds chief executive Vivek Gadodia said the industry was facing an “unprecedentedly weak diamond market due to global macro factors as well as the recent Middle East tensions”.
He added that the company continued to see deterioration in the value of the smaller-sized diamonds, where we do not currently expect a material short-term recovery.
He noted that weaker diamond prices and the sustained strength of the rand had significantly affected the mine’s performance.
Finsch, located near Lime Acres in the Northern Cape, is South Africa’s second-largest diamond producer after Venetia and has operated as an underground mine since the early 1980s using conventional sub-level caving methods.
According to the Minerals Council of South Africa (MCSA), the mine can produce around 1.8 million carats of diamonds a year, and still has reserves expected to last for more than two decades.
Petra also confirmed its intention to launch a Section 189A retrenchment process at the Cullinan Diamond Mine as part of broader efforts to reduce expenditure across the group.
The company said it believed the move was a necessary step to improve the long-term resilience of the group.
In June, Petra announced that business rescue practitioners Daniel Theodorus van Jaarsveld and Luke Bernard Saffy had been appointed to oversee Finsch.
They have assumed control of the mine and will prepare a business rescue plan to present to creditors for approval.
Backlash from the National Union of Mineworkers (NUM)
The developments have drawn fierce criticism from the NUM, which said the business rescue process at Finsch affects around 689 workers, while the retrenchment process at Cullinan threatens approximately 1,090 more jobs.
NUM Petra Diamonds chief negotiator and national health and safety secretary Masibulele Naki rejected the idea that labour costs should bear the blame for the company’s financial difficulties.
“It is unacceptable for companies to continuously point fingers at labour costs whenever they face operational or financial challenges,” he said.
“Workers are not a liability on a balance sheet; they are the creators of value and wealth in the mining industry. Without workers, there is no production, and there is no profit.”
Naki argued that executive remuneration, management decisions, investment strategies, market conditions and operational inefficiencies should also be considered when assessing the company’s position.
“The narrative that labour is the highest cost to the company must be challenged. Workers should not be expected to pay the price for challenges they did not create,” he said.
The union acknowledged that the global diamond sector is under pressure from weak consumer demand, falling rough diamond prices, competition from laboratory-grown diamonds and wider economic uncertainty.
However, it insisted these realities should be recognised honestly rather than attributing financial stress primarily to wages.
“Retrenchments cannot become a business strategy. Every job lost means a family pushed closer to poverty, a child whose future becomes uncertain, and a community that suffers economic decline,” Naki said.
NUM has called on the government to intervene urgently, and has called for the ministers responsible for mining, energy, trade and finance to work together to protect jobs and support the industry.
“Government cannot be a spectator while nearly 1,800 workers and their families face an uncertain future,” Naki said.
“Every effort must be made to preserve jobs, sustain production, and protect communities that depend on mining for their livelihoods.”
The union said it would participate fully in both the business rescue proceedings at Finsch and the retrenchment consultations at Cullinan.
It vowed to use every legal, organisational, and collective bargaining mechanism available to defend jobs, protect workers’ rights, and ensure that workers’ voices are heard throughout these processes.
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