Kao Diamond Mine shuts down amid fuel cost surge, weak prices

Kao Mine shut down June 30 due to rising fuel costs linked to the conflict in the Middle East and a prolonged slump in global diamond prices. The company announced earlier this week that the Kao Mine would be placed under care and maintenance from July, citing unsustainable fuel costs, depressed diamond prices and mounting capital requirements. The move is expected to affect hundreds of workers.

“The biggest challenge confronting the operation was the prolonged, severe decline in global rough diamond prices,” SMD Chief Executive Officer Neo Hoala said, noting that the market downturn is the primary trigger for the closure. However, rising fuel costs have dealt an additional blow to the company. The Kao Mine consumes about 600,000 litres of diesel each month to power heavy machinery and haulage operations. Following successive fuel price increases, the mine’s monthly diesel bill has nearly tripled.

The fuel crisis has compounded a deeper structural challenge facing the diamond sector — the rapid proliferation of synthetic diamonds produced at a fraction of the cost of natural stones. Consumer demand has increasingly shifted toward laboratory-grown alternatives, exerting sustained downward pressure on natural diamond prices.

About 750 permanent employees and contractors will be directly affected by the shutdown. Hoala said the company could not provide a timeline for resuming operations but added that the board would review market conditions every three months.