Gem Diamonds Loss Flags Mining Crisis

Aerial view of the Letšeng mine in Lesotho. (Credit: Gem Diamonds)

“Which mining companies are making a profit in the current diamond market?” an analyst asked near the end of Gem Diamonds’ half-year earnings call. Clifford Elphick, the group’s long-standing CEO, didn’t hesitate: “I don’t think any.” He paused, then conceded maybe Lucara — “we can look it up” — but concluded that “nobody is making a profit… among the mining companies.”

That blunt exchange capped a sobering set of results for Gem Diamonds. The company posted a net loss of $16 million for the first half of 2025, its first interim loss since 2016, as revenue plunged 42% year on year to $45.5 million — the lowest since late 2012 (see graph).

Based on Gem Diamonds reports, according to records kept by The Diamond Press.

The numbers reflected both operational and market headwinds. Letšeng, Gem Diamonds’ sole operating mine in Lesotho, processed more lower-grade ore and yielded fewer large, high-value diamonds that it is famous for – The recovery of specials above 10.8 carats fell 21% year on year to 297 stones.

But the global market environment arguably weighed more heavily on the company: US tariffs on Indian goods, geopolitical uncertainty, weak Chinese demand, and the drag from lab-grown all took their toll on the diamond trade.

And the diamond mining segment has felt it more than most. To the analyst’s question, only Lucara and Alrosa have reported profits so far in 2025 — the latter despite being subject to sanctions by the G7 nations. Everyone else was in the red, according to The Diamond Press records for the period:

• Alrosa – net income $478 million (RUB 40.6 billion)

• Lucara Diamond Corp. – net profit $12.4 million

• Burgundy Diamond Mines – net loss $29.5 million

• Gem Diamonds – net loss $45.5 million

• Mountain Province Diamonds – net loss $52.1 million (CAD 72.2 million)

• De Beers – underlying loss $245 million

• Petra Diamonds – results due later in September

The pressure has triggered retrenchments and shutdowns across the sector. At Letšeng, Gem Diamonds cut 240 jobs, slashed executive salaries, significantly reduced waste stripping, and shortened the life-of-mine plan by four years to 2035. That bought the company some breathing space, with unit costs trending below $900 per carat, according to Elphick, while the average selling price fell 26% to $1,008.

Still, Elphick acknowledged the limits of this approach. When asked if there comes a point where diamonds should stay in the ground rather than be mined at a loss, his answer was candid: “If diamond prices continue dropping, then we will arrive at a point where you cannot keep cutting costs forever,” he said. “You get to a point where you simply cannot cost-cut yourself to a profit.”

It’s a recognition that hangs over the industry. Gem Diamonds has some cushion in the high-value segment, which weathers volatility better than most. But many producers don’t have that luxury. Several have already hit their breaking point, with no more meaningful cuts left to make. Unless the market improves, more will soon face the same daunting dilemma.