Jeulia Jewelers is closing its doors and will be sold off to a private equity firm, the company said.
It was the latest business in a string of closures at the jeweler, which has a factory in Victoria’s south-west, which also includes the company’s flagship store in Melbourne.
The company said it would be “fully liquidating all assets” as it continues to pursue its plan to exit.
The company said the decision to close was not a result of a lack of interest from potential investors, but rather due to “continuing uncertainty and uncertainty about the future of the business”.
“As the company has been working through this process, we have taken steps to address the concerns that have been raised and we have addressed those concerns with a view to achieving a sale of the company, with all the parties involved in a constructive manner,” the company told a news conference on Friday.
A spokesperson for the company did not respond to requests for comment on the reasons for the sale.
In August, the Victorian Government announced that it was considering the sale of Jeulia, which operates one of the largest diamond stores in the world.
Victoria’s diamond industry is struggling after falling demand and a glut of low-quality gems caused by a record-low price for diamonds.
At the time, Victoria Diamonds said that the company had been unable to meet its debt obligations.
“Despite a recent review by the Victorian Diamond Council, the current situation has put a significant strain on the diamond supply chain, with the industry facing a significant shortfall in the amount of diamonds being mined and the market facing significant uncertainty and supply constraints,” it said in a statement.
Last week, the state’s premier, Daniel Andrews, told a parliamentary committee that he had instructed his department to investigate whether the company was failing to comply with the state government’s requirement that the state sell off its shareholding in the business.
But in a written submission to the committee, the State Diamond Council denied the allegations.
It said the council had never asked for a sale and that the process for making a sale was independent of the sale, and had been undertaken in consultation with the Victorian government.
“[The] Council has never received any formal letter from the state suggesting that it is appropriate for Victoria to make a sale,” it wrote.
David Jones, a director at the Victorian Diversified Diamonds Association, said it was unclear why the council would want to sell Jeulia without seeking approval from the Victorian State Government.
Mr Jones said he thought the council’s submission was disingenuous because the council was not the sole bidder for Jeulia.
He said the Victoria Diamond Council had the power to negotiate a sale with the private equity group and was required to do so.
This is not the first time the diamond industry has been hit by a downturn in demand.
During the financial crisis, the industry saw a surge in demand after the Government launched its National Capital Commission on the plan to close Victoria’s two diamond mines, which had been shut since 2001.
Many people who worked in the industry had their jobs cancelled or had their contracts cancelled, causing the diamond sector to fall from around $40 million in 2009 to less than $6 million in 2017.
However, the market was booming again in 2018.
Since the end of last year, demand has been higher and prices have been lower, said Mr Jones.
Despite the boom, demand for diamonds is expected to drop from around 30 per cent of the market this year to about 17 per cent by 2022.
According to the Council, diamond production is expected be around 1.4 million tonnes in 2020, down from 4.6 million tonnes last year.
While some of the decline in demand may be attributable to the Government’s plan to shut Victoria’s mining industry, Mr Jones said there was a good chance that demand for diamond could rise again in the future.
Some industry experts, including Mr Jones, said the decline could be partly explained by the rise in the popularity of the sport of tennis.
On Tuesday, the AFL announced that the league had taken a “comprehensive review” of the diamond business in Victoria.
An AFL spokeswoman said the review, which is due to be completed by the end, was designed to “help the Victorian Premier review and balance the needs of the Victorian industry in the light of changing market conditions”.
She said the Government would continue to monitor the industry and the Government and the diamond council were continuing to engage with the diamond community to “develop a better and more sustainable business model”.
The ABC’s Andrew Legg said the industry would be looking to take a more active role in the retail and jewellery sector.