(Reuters) -Lesotho’s biggest diamond mine, Letseng, has laid off 240 workers, a fifth of its workforce, as it battles persistently low gem prices due to weak demand and an uncertain global economic environment, parent company Gem Diamonds said on Thursday.
Diamonds are vital to Lesotho’s economy, with the sector contributing up to 10% of its GDP and providing employment for thousands in the country of just over 2 million people. Diamonds are also Lesotho’s major export commodity, along with textiles and clothing.
Gem Diamonds said its Letseng mine, which produces some of the world’s largest and most valuable gems such as the 910-carat “Lesotho Legend”, had revised its mine plan and cut jobs to reduce costs.
“Sustained pricing pressure, softer demand in key markets, ongoing macroeconomic and geopolitical uncertainty, and tariff uncertainties in respect of India, combine to create difficult trading conditions,” Gem Diamonds CEO Clifford Elphick said in a statement.
Gem Diamonds on Thursday reported a half-year loss of $11.7 million, compared to a $2.1 million profit a year earlier, after revenue plunged 42% on the back of weaker prices.
It booked a $10.7 million impairment on the value of Letseng due to the weak diamond prices.
The company realised an average price of $1,008 per carat in the six months to June 30, 26% lower than last year. Its half-year production was 47,125 carats, compared to 55,873 carats during the same period last year.
Diamond prices have fallen about 35% from early 2022 highs due to changing consumer preferences and the rise of lab-grown gems, according to the Zimnisky Global Rough Diamond Price Index.
Miners have responded by curbing output, cutting jobs and halting projects.
(Reporting by Nelson Banya; Editing by Susan Fenton)
