Stornoway Diamond Corp., owner of the Renard Mine in Quebec, applied for protection under the Companies’ Creditors Arrangement Act (CCAA)—the Canadian version of bankruptcy—in Quebec Superior Court on Oct. 27.
The company said in a filing that it had to seek creditor protection because of India’s two-month moratorium on rough diamond imports. Most of Stornoway’s buyers are in India.
“The ongoing freeze of imports has had a catastrophic impact [on Stornoway’s revenue], which will require the protection of the CCAA in order to put the Renard mine into care and maintenance between now and January 2024 in order to minimize 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 effect, the diamond market had been struggling for some time, according to Stornoway’s filing. “At the beginning of 2023, the projected Renard Mine diamond average price was set at $120 carat, but the prices have declined to approximately $81.50 a carat,” it said.
That price drop was sparked by an “excess of polished inventory in India, lower demand in the United States, and a Chinese market that has not recovered as quickly as anticipated,” it said.
As part of a planned restructuring, Stornoway will put Renard in CCCA “care and maintenance” until at least January 2024. The company also is putting its assets up for sale and looking for investors, it said.
Stornoway employs 530 people. During the care and maintenance period, its workforce will shrink to 71.
Top: the Renard mine (photo courtesy of Stornoway Diamond Corp.)
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