Stornoway Diamond Corp, owner of the Renard mine in Quebec, filed for protection under the Companies’ Creditors Arrangement Act (CCAA) – Canada’s version of bankruptcy – in Quebec Superior Court on 27 October.
The company said in a filing that it needed to seek creditor protection because of India’s two-month moratorium on rough diamond imports. Most of Stornoway’s customers are in India.
“The ongoing import freeze has had a catastrophic impact [on Stornoway’s revenues], requiring the protection of the CCAA to place the Renard Mine on care and maintenance until January 2024 in order to minimise its costs, implement cost reduction initiatives and explore alternative avenues for the sale of its diamond reserves,” the filing said.
While the Indian action had an immediate impact, the diamond market has been struggling for some time, according to Stornoway’s filing. At the beginning of 2023, the projected average diamond price for the Renard mine was set at $120 per carat, but prices have fallen to approximately $81.50 per carat,” it said.
The price decline was triggered by “an overhang of polished inventory in India, lower demand in the United States and a Chinese market that has not recovered as quickly as expected”, it said.
As part of a planned restructuring, Stornoway will put Renard into “care and maintenance” at CCCA until at least January 2024. The company is also putting its assets up for sale and seeking investors, it said.
Stornoway employs 530 people. During the care and maintenance period, the workforce will be reduced to 71.
