Gem halts work at Ghaghoo mine owing to the low price of its diamonds
The price of Ghaghoo diamonds fell from $210 per carat in early 2015 to $142 per carat at its most recent sale in December 2016
Gem Diamonds suspended its Ghaghoo mine in Botswana with immediate effect because of low prices for the diamonds coming from the operation.
Ghaghoo, the first underground diamond mine in Botswana, has been a difficult mine to build, having to sink a decline shaft through a thick layer of Kalahari desert sand in a remote and difficult to reach location in northern Botswana. The project started in October 2011 and has yet to reach commercial production.
"The company’s board has decided that the Ghaghoo mine in Botswana will be placed on care and maintenance with immediate effect," Gem said on Thursday, pointing out that the mine was on the cusp of reaching commercial production and that it would cost $3m a year to maintain it.
"However, the material fall in the prices of its diamonds from $210 per carat in early 2015 to $142 per carat at its most recent sale in December 2016, emphasises the weak state of the diamond market for this category of diamonds," Gem said.
Gem would monitor market conditions to decide when to restart the mine profitably. Gem operates the Letseng diamond mine in Lesotho and produces large gem-quality diamonds regularly.
Other attempts by Gem to extend its operations beyond Lesotho have been unsuccessful, with the sale of the Ellendale mine in Australia for $15m in 2012, and the closure of the Cempaka alluvial mine in Indonesia in 2008. Exploration efforts in Angola and elsewhere in Africa came to naught.