Gem Diamonds Suspends Operations at Indonesia Mine

Miner Gem Diamonds Ltd plans to shut down operations at its Cempaka mine in Indonesia due to low diamond prices, it said on Monday.

The firm, which warned on 17 November that it may make a loss this year due to the impact of the global financial crisis, said in a statement it was taking the action effective 1 January.

The mine would be put on "care and maintenance", which keeps the mine's infrastructure in good shape so it can be reopened when prices improve.

The firm focuses on producing large, high-quality diamonds at mines in Lesotho, Australia and Indonesia.

In its November trading statement, Gem Diamonds said there had been a significant fall in revenue in the fourth quarter when the average price paid for its gems stood at $1,382 versus an average for the year of $1,916.

Some of its special gems, however, are still commanding steep prices.

On 2 December, it said it had sold a 478-carat diamond, the 20th largest rough diamond ever recovered, for $18.4 million to a unit of the UK-based Graff Diamonds, which holds an 8.2% stake in the firm.

The diamond, named the Light of Letseng, was mined at its flagship mine in Lesotho.

By Eric Onstad, Reuters