Petra has been fixing its balance sheet after spending years investing in its flagship Cullinan mine in South Africa.

On Monday, it said the coronavirus outbreak had dented demand in the diamond market as stores were forced to close during the important Lunar New Year holiday period in China.

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

It cut its cash flow target to between $100 million and $150 million by June 2022, from its earlier range of $150 million to $200 million.

Petra reported a 11% fall in core earnings for the first half, but said its full-year production outlook was unchanged.

Coronavirus is 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 United States, following a prolonged trade war and pro-democracy protests in Hong Kong.

"Activity across the diamond pipeline is therefore expected to reduce until the virus is brought under control," Petra said in a statement.

China has seen retail stores shut and the Hong Kong and diamond auctions and industry events had been delayed or relocated.

Petra's Chief Executive Officer Richard Duffy said consumers were cautious about buying diamonds in the current uncertain climate, but said the company was working on increasing profit margins to offset any impact.

"That might have a small impact on the margins, but we already have a programme, Project2020, aimed at supporting the margins," he told Reuters.

Apart from problems in China, some analysts have also blamed the increased importance of laboratory-grown stones for price weakness in the diamond market.

In South Africa, miners including Petra, have also had to contend with load shedding because of problems at the heavily indebted state utility Eskom and Petra said disruption to production remained a risk.

Petra bought Cullinan in 2008, aiming to breathe new life into the mine renowned for yielding the largest rough gem diamond ever found - 3,106 carats - and being the world's main source of rare blue diamonds.

By Shanima A and Noor Zainab Hussain