BRCDiamondCore (TSX: BCD, JSE: BCD) has decided to keep its alluvial operations in the Northern Cape, South Africa suspended amidst a slump in the diamond market and uncertainty about short-term diamond demand. However, the company believes a recovery in the diamond market could occur quicker than expected.Chief financial officer Brian Scallan told Mineweb today that prices of diamonds have dropped dramatically since October due to a number of factors, including the lack of necessary credit in the market affecting diamond dealers.He said there was uncertainty over immediate and short-term demand, but the key thing was that diamonds were a good store of wealth. A market recovery could take place when the current surplus cleared and prices pushed up again. He did mention though that prices could drop first before they recovered.It is difficult to say when it will happen, it is not likely to happen before another quarter, he said.Scallan said the market for big stones had not seen the same collapse as the rest of the diamond market and the company is for this reason keeping its main Silverstreams operation, that produces large stones, running on a smaller scale.It is starting consultations with workers and unions this week that could lead to retrenchments at its Paardeberg, Paardeberg East and De Kalk bulk sampling operations as the company simply has to stop the haemorrhaging of cash. This comes as the current reality is that the operations are making losses while diamond prices are so low.Scallan said that Silverstreams has been reduced to a mean and lean operation that will only function during daylight hours. The operation has been characterised by stones that are materially larger than those of Paardeberg. The company suspected that they originated from Lesotho and that the Orange River carried them to Silverstreams.He added that the company hasn't changed its strategy of undertaking alluvial diamond mining to support its long-term strategy of focusing on its great exploration prospects in the DRC, it has only changed tactics.BRCDiamondCore's closure of Paardeberg and downsizing of Silverstreams comes after Rockwell Diamonds announced on Monday it was extending its year-end shutdown to the end of January and would then ramp up production at Saxendrift, while suspending operations at Wouterspan. Both these operations are located on the Middle Orange River.Commentators on the mining sector have noted that after the platinum sector, the diamond sector appeared to be hardest hit by the financial crisis and economic downturn.
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