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Petra Diamonds delays Cullinan Mine tender amid US tariff uncertainty

Petra Diamonds - the third largest diamond producer in the world - announced on Wednesday that it would delay the sale of gems produced at its Cullinan Mine, located in South Africa, until the U.S. Tariffs were clarified.

As part of its regular tenders, the company had already sold diamonds in its Finsch mine (also in South Africa) and its Williamson Mine in Tanzania, before U.S. president Donald Trump unleashed an avalanche of tariffs on last week.

Why it's important

The tariffs on U.S. imported products, ranging from diamonds to dental floss, have caused companies to rethink how they do business. They also sparked fears of a potential trade war which could stunt economic growth.

South Africa, India and South Africa are the two largest diamond exporters to the United States.

CONTEXT

Petra is undergoing a restructuring program as it struggles with the widening of losses caused by the prolonged weakness on the diamond market.

The iconic Cullinan Mine, where 120 years ago the largest gem-quality stone was found, is now producing less high-quality stones.

Petra has been unable to compete with the other diamond sellers in the region when it entered the market via tenders. These are scheduled around certain calendar events.

Key Quote(s)

The diamond miner stated that the U.S. announcement of tariffs late last week had resulted in considerable market uncertainty.

By the Numbers

Petra sold 176,000-carat gems from its Finsch & Williamson mines at a total price of $18 million during its fifth tender. This represents a 9% increase in the average price compared to its fourth tender.

This was despite the fact that about 200,000 carats Cullinan materials were removed from the last tender.

It has, however, made $103 millions in sales from its first five tenders in this year. This is a drop of 25% from the $138 that it made from its first five bids last year.

MARKET REACTION

Petra shares dropped 6.1% in early trading to 26.3 pence. (Reporting by Yamini Kalia in Bengaluru; Editing by Savio D'Souza)

(source: Reuters)