What's Happening?
Gem Diamonds has announced a 20% reduction in its workforce at the Letseng diamond mine in Lesotho, laying off 240 workers due to persistently low diamond prices. The mine, known for producing some of the world's largest gems, has revised its operational plan to cut costs in response to weak demand and global economic uncertainties. The company reported a half-year loss of $11.7 million, a stark contrast to the $2.1 million profit from the previous year, as revenue dropped by 42%. The average price per carat fell by 26%, reflecting a broader trend of declining diamond prices.
Why It's Important?
Diamonds are a vital component of Lesotho's economy, contributing up to 10% of its GDP and serving as a major export commodity. The workforce reduction at Letseng mine highlights the challenges faced by the diamond industry, which is grappling with changing consumer preferences and the rise of lab-grown gems. The economic impact on Lesotho could be significant, affecting employment and export revenues. The situation underscores the need for diversification in Lesotho's economy to reduce dependency on diamond exports.
