Burgundy Diamond Mines will suspend operations at one of the two active pits at its Ekati mine in Canada and let go of hundreds of workers to cope with financial constraints stemming from the market downturn.
The company has temporarily halted open-pit mining at Point Lake, deeming that area “sub-economic,” meaning that the funds needed to continue work at the site outweigh the return on investment, given the current low market prices for rough, according to Canadian media outlets. However, the miner plans to continue maintenance on the pit, which will enable it to restart quickly and ramp up production if prices recover, it said. On Wednesday, Burgundy requested the Australian Stock Exchange place a trading halt on its shares pending an operational update.
Meanwhile, Burgundy will continue regular operations at the Misery pit, the second active mining area at Ekati, approximately two kilometers from Point Lake. Production rates at Misery have “significantly improved” in recent months, the company explained.
The company will also release several hundred employees and contract workers while the pit is closed, it stated.
The move comes even after the miner announced it was working on collaborations with manufacturers, traders, jewelers and luxury brands for direct sales of its rough, to maximize value.
Revenue for the first quarter fell 38% to $73 million, as the average price slid 30% to $62 per carat, Burgundy said in May. The month was also tough due to the departure of CEO Kim Truter, who was instrumental in its acquisition of Ekati in 2023. Burgundy is currently without a chief, as Jeremy King, a member of its board of directors, runs the company on an interim basis until it finds a new CEO. Targeted relief measures the Canadian government issued in April to support the diamond-mining sector and help it maintain economic stability amid the downturn have failed to enable Burgundy to carry on as usual.
Burgundy is not the first diamond-mining company to see mass layoffs as its only recourse during the prolonged slowdown. Earlier this month, Lephema Executive Transport furloughed 400 workers from the Mothae mine in Lesotho, while previous owner, Lucapa Diamond Company went into administration. In May, Botswana President Duma Boko announced plans for the termination of over 1,000 workers at Debswana, the government’s joint-venture with De Beers. Meanwhile, in March, a South African labor union claimed Petra Diamonds intended to dismiss as many as 468 workers at its Cullinan and Finsch mines.
Image: The Ekati mine. (Burgundy Diamond Mines)