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Petra Diamonds warns of coronavirus hit as retail stores close

The coronavirus outbreak is seen as a new threat to the diamond industry
The coronavirus outbreak is seen as a new threat to the diamond industry

Petra Diamonds has warned the coronavirus outbreak had hurt demand in the diamond market as stores were forced to close during the important Lunar New Year period in China.

This will delay the miner's debt reduction initiative. 

Petra said the impact of the fast-spreading virus would cause delays in Project 2022, its debt reduction programme launched last year. 

The miner also cut its cash flow target to between $100m and $150m by June 2022, from its earlier range of $150m to $200m. 

The virus outbreak is seen as a new threat to the diamond industry which has already been hit by lower demand from China, the world's second largest market after the US, following a prolonged US-China trade war and the Hong Kong protests. 

Coronavirus-related fears have also prompted the world's largest diamond mining company, Alrosa to shift its diamond auctions from Hong Kong to elsewhere. 

Petra said the outbreak impacted consumer spending around the Lunar New Year and had a short-term effect on diamond trading, travel and retail in some of the Asian markets and further afield. 

"Activity across the diamond pipeline is therefore expected to reduce until the virus is brought under control," the company said and added operational cash flow benefits had been eroded. 

Petra said the virus outbreak in China resulted in a shutdown of retail stores and the subsequent postponement of the Hong Kong International Diamond, Gem and Pearl show. 

The company also reported a 11% fall in core earnings for the first half, but backed its full-year production outlook.