A weakening diamond market has pushed Gem Diamonds to mothball a mine

 
Courtney Goldsmith
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Low prices have signaled a weak diamond market to this miner (Source: Getty)

Low diamond prices have pushed Britain's Gem Diamonds to mothball its Ghaghoo mine in Botswana.

Gem Diamonds, which works in the Letseng mine in Lesotho and the Ghaghoo mine, will place the mine on care and maintenance with immediate effect, resulting in an annualised care and maintenance cost of $3m (£2.4m), post settlement expenses.

Shares in the London-listed global miner lost their shine, falling as much as two per cent in morning trading.

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The development of the mine has progressed well and is nearly ready to commence full commercial production, Gem Diamonds said today in a statement.

However, the material fall in the prices of its diamonds in this category over the past year emphasises the weakness of the market.

In early 2015, the miner made $210 per carat, while at its most recent sale in December 2016, Gem Diamonds said it received just $142 per carat.

"With the company's focus on profitable production, the decision has been made to place the asset on care and maintenance, and to continue to monitor market conditions for a time when commencing full production would make economic sense," the miner said.

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