Petra Diamonds has reported a sharp fall profits as weak Chinese demand hit world diamond prices.
The South African diamond miner, which owns the pits that produced the gems in some of the Crown jewels, reported a drop in sales and an almost $40m slump in pre-tax profits to $85m in the year to June.
David Abery, finance director, said that the diamond market was “challening” during the year with prices down 10pc due to the closure of the Antwerp Diamond Bank (ADB), weaker Chinese demand, and a strong dollar.
China has become an increasingly important market for diamonds and retail demand there has slowed as the economy’s feverish pace of growth winds down.
Stricter rules on graft and corruption have also weighed on purchases. The closure of ADB last year removed a key source of funding for the European cutting and polishing industry, which muted demand for rough diamonds.
However, the US, which is the world’s largest market for diamonds, remained stable and Mr Abery said the ongoing weakness of the South African Rand should favourably impact results next year.
Petra Diamonds owns and operates the Cullinan diamond mine, which produced the First Star of Africa, a diamond mounted at the top of the Sovereign’s Sceptre on display in the crown jewels in the Tower of London.
Last year the company produced 3.2 million carats of diamonds and has maintained its production target of 3.3 million to 3.4 million carats for this year.
The miner also said it was on track to reach its longer-term target of about 5 million carats of diamond production a year by 2019.
Petra is expanding its Finsch and Cullinan mines to extend their lifespans, spending $271m on this and other projects in the year. Capital spending is expected to peak in the next 12 months as the new sections of the mines start ramping up production.