KIMBERLEY – Experts warn that diamond mining is not as lucrative or stable as many believe.
Mining analyst Peter Major says standalone diamond mines struggle to survive over the long term due to volatile prices.
While prices can double during boom periods, they can fall by as much as 50 percent during downturns.
Major’s comments come as Ekapa Mining announced its sudden liquidation, placing workers’ jobs at risk.
The company cited financial difficulties, saying it was no longer viable to continue operating as a mining and processing business.
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According to Major, larger diamonds -- particularly those over five carats -- tend to retain value better than smaller stones. Smaller diamonds are more vulnerable to market pressures, including competition from lab-grown diamonds and lower-cost open-pit mines.
“They're hit from artificial diamonds out of laboratories. They're hit by new mines opening up [as well as] open pit mines that have lower costs. So now you've got a high-cost old underground mine with the bad prices,” he explains.
Major doubts that standalone diamond mines can survive without being part of a larger mining group with diversified income streams.
The liquidation is expected to deepen economic hardship in Kimberley.
Workers say they were blindsided by the decision, with many expecting to receive their salaries before the sudden closure.
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The National Union of Mineworkers (NUM) in the Kimberley region has expressed shock at the move.
The closure comes as five miners remain trapped underground following a mud rush incident on 17 February.
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A sudden water flood and mudslide inundated a newly developed underground section within minutes.
The mine says life-support drilling was completed into three areas where the miners had been working shortly before the incident.