Government Rescue Plan for South Africa's Diamond Industry
October 29, 26
(IDEX Online) - South Africa has established a government-industry task team to identify measures to help struggling diamond producers, as falling rough-diamond prices, competition from lab growns and global inflation threaten mines and jobs.
The intervention comes after Petra Diamonds placed its Finsch mine under business rescue and De Beers announced a two-year production pause at Venetia, the country's largest diamond mine.
In a written parliamentary reply on October 26, mineral and petroleum resources minister Gwede Mantashe said the team would examine initiatives to mitigate the challenges facing the industry. The Minerals Council South Africa and diamond producers will also take part.
The immediate aim is to find ways to support producers across the sector, from major mining companies to junior and small-scale operators, which Mantashe said were being hit hardest.
The government has not yet disclosed the team's detailed work plan, specific proposals or timetable for recommendations. No budget or additional resources have been announced for the task team.
The task team's work will need to address both the market downturn and the cost pressures undermining the viability of domestic operations. Mantashe cited competition from lab grown diamonds and global inflationary pressures affecting major and junior producers, as well as small miners.
The urgency is underlined by official production figures. South African diamond production fell 19.5% year to date through August, according to figures cited in the minister's parliamentary response.
Diamonds were the weakest-performing mining commodity in August, with output falling 23.0% in the three months ended August compared with the preceding three months, seasonally adjusted, according to Statistics South Africa, the country's official national statistical agency.
Petra said in its July operating update that the structural decline in prices for smaller diamonds, combined with the strength of the South African rand, had made Finsch unviable. The company reported an average price of $47 per carat for Finsch diamonds in its April and May tenders, compared with $56 per carat previously.
De Beers' production figures underline the scale of the changes. South African output fell 37% year on year to 418,000 carats in the third quarter of 2026, as Venetia reduced production and processing ahead of its planned suspension. De Beers said no further carat production was expected in South Africa during the remainder of 2026.
File pic of the Venetia mine.