Low Prices Trigger A Four-Way Merger Proposal For African Diamond Miners – by Tim Treadgold (Forbes Magazine – December 12, 2018)


Tim Treadgold has been writing about the mining and oil industries for more than 40 years.

Tough times in some parts of the diamond-mining industry has prompted an innovative solution, a four-way merger to create a new southern African diamond specialist.

The proposal, from the London office of the German bank, Berenberg, could see Gem Diamonds, Petra Diamonds, Lucara Diamond Corporation and Firestone Diamonds emerge as a single business with enhanced financial metrics courtesy of cost savings and a focus on big, high-quality gems.

If the deal happens, and at this stage it is just a proposal from Berenberg and not something the diamond-miners have embraced, the new business would have mines in South Africa, Botswana, Tanzania and Lesotho.

Collective diamond production would total five million carats a year, which is equivalent to 3% of global output, but more importantly the proposed business would account for 8% of diamond supply by value.

The difference between volume and value is the key to Berenberg’s plan which has been published at a time when miners of small and low-grade diamonds are battling a flooded market whereas companies able to supply high-quality gems are generating strong profits.

For the rest of this article: https://www.forbes.com/sites/timtreadgold/2018/12/12/low-prices-trigger-a-four-way-merger-proposal-for-african-diamond-miners/#52028e243446

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