De Beers cut diamond production

In a significant move, the world’s largest diamond mining company by value has announced further production cuts, adding to its already implemented plan to curtail output by 10 percent. This decision led to a 15 percent year-on-year decline in second-quarter production, dropping to 6.4 million carats, as reported in an update on Thursday.

The potential sale or listing of De Beers was a crucial component of Anglo’s broader strategy to fend off a £39 billion takeover bid from industry giant BHP earlier this year. However, the ongoing slump in the diamond market poses a challenge to achieving this goal by the end of 2025.

“Trading conditions became more challenging in the second quarter as Chinese consumer demand remained subdued,” stated Duncan Wanblad, Anglo’s chief executive.

High inventories for diamond traders and manufacturers, coupled with expectations of a slow recovery, have prompted the company to consider further production cuts. This strategy aims to manage working capital and preserve cash amid the tough market conditions.

The prospect of deeper production cuts comes as the company disclosed the impact of other setbacks in its second-quarter production update, which had been anticipated by analysts.

Anglo has downgraded its full-year guidance for metallurgical coal from 15-17 million tonnes to 14-15.5 million tonnes following a fire at its Grosvenor mine in Australia, which has been out of action for months. Costs for the coal business are also expected to rise significantly this year, estimated at $130 to $140 per tonne, up from $115 per tonne.

The company is prioritising the sale of its metallurgical coal division due to strong buyer interest, with plans to divest De Beers, its platinum unit, and nickel operations to follow.

Additionally, an impairment on the Woodsmith fertiliser mine in North Yorkshire, UK, is expected in the upcoming half-year results, as spending on the project is drastically cut back as part of the turnaround plan.

Despite these challenges, shares in Anglo rose by 2 percent in early trading in London on Thursday, buoyed by production results for most commodities exceeding consensus analyst forecasts. The company achieved record second-quarter iron ore production in Brazil and is on track to meet its guidance for the copper unit.

Wanblad reaffirmed his commitment to streamlining the company to focus on just copper, iron ore, and fertiliser within 18 months. “We are working at pace to execute on the asset divestments, including steelmaking coal,” he said. “Work is progressing with the aim of substantively completing this transformation by the end of 2025.”

Diamond Leader De Beers Will Be Sold If BHP Acquires Anglo American

BHP’s share-swap take over bid for arch-rival Anglo American to create a $185 billion mining giant will struggle to succeed, but if it does there is one arm of the target certain to be sold, the De Beers diamond business.

Despite its century-old reputation and claim to be the custodian of the diamond industry De Beers has become more trouble than it’s worth, under attack from two directions.
Demand for diamonds is being battered by global economic uncertainty while the problem of slowing sales is being supercharged by the increasing popularity of lab-grown gems which are indistinguishable from mined diamonds.

A third factor which could seal the fate of De Beers is that BHP quit the diamond industry a decade ago after struggling to mix mining, and its basic function of heavy-duty earthmoving, with the fine art of producing and marketing baubles for the rich and newlyweds.

It could get worse for the diamond mining business because prices for lab-grown gems are continuing to fall as a market split widens. High-value jewels remain of interest to a handful of wealthy people, while the lion’s share of the market shifts to lab-grown.

De Beers, which was a pioneer in the business of lab-grown gems via its Lightbox subsidiary, has consistently played down the threat to its traditional mined-diamond business but sustaining that argument became a little harder on Tuesday when it reported a big production fall in the March quarter.

The 23% drop in output caused Anglo American to lower its full year diamond production target from between 29 million and 32 million carats to between 26-and-29 million carats.

Management blamed the decline on the effect of a build-up of inventory of unsold stones with lab-grown gems cannibalising demand for mined stones.

Forbes Daily: Join over 1 million Forbes Daily subscribers and get our best stories, exclusive reporting and essential analysis of the day’s news in your inbox every weekday.It Could Get A Lot Worse
It could get a lot worse if a recent study of the diamond market by a specialist London jewelry firm is a guide.

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According to Hatton Jewels, which specialises in handling antique second-hand gems and does not sell lab-grown gems, some lab-grown diamonds are spectacular overpriced with retailers inflating their prices by as much as 1200%.

Rachel Smith, head valuer at Hatton said that in the current landscape, every business pays a similar wholesale price for lab-grown diamonds, regardless of disparities in their retail market value.

“The wholesale price of lab-grown diamonds can plummet to as low as 1% of their natural counterparts’ value,” Smith said in an emailed statement.

Smith cited three retail prices for a two-carat F VS1 (high quality) lab-grown diamond being offered for sale at $11,375, $2730 and $866. A gem of that size and quality costs between $500 and $759 to make.

“While some companies uphold integrity by selling lab-grown diamonds at fair market value, ensuring equitable competition, others exploit the situation for profit.


Diamond “growing” machines in India.
“Some retailers inflate prices by as much as 1200%, potentially driven by a desire to maintain the narrative that they are not different from natural diamonds, otherwise they may be considered too cheap and therefore undesirable, or to capitalize on trends at the expense of consumers.”

If Smith is right and lab-grown diamonds are currently being sold at inflated profit margins, the ease with which they are produced will ensure an increase in supply, resulting eventually in a price crash.

When that happens the value of the once-great De Beers business will fade, and the appeal to a mining company like BHP will disappear — if it succeeds in acquiring Anglo American.

Source: Forbes

Anglo reports latest De Beers’ rough diamond sales value

Anglo American has announced the value of rough diamond sales (Global Sightholder Sales and Auctions) for De Beers’ second sales cycle of 2024, amounting to US$430 million.

The provisional rough diamond sales figure quoted for Cycle 2 represents the expected sales value for the period and remains subject to adjustment based on final completed sales.

Al Cook, CEO of De Beers, said: “I’m pleased to see a further increase in demand for De Beers rough diamonds during the second sales cycle of 2024. However, ongoing economic uncertainty in the US has led to retailers restocking conservatively after the 2023 holiday season. Consumer demand for diamond jewellery is growing in India but remains sluggish in China. Overall, we expect that the ongoing recovery in rough diamond demand will be gradual as we move through the year.”

Source: globalminingreview

Anglo American to Cut De Beers’ Overheads by $100M

Roller machine used to separate and sort flat shaped and non- flat shaped rough diamonds. DTC Botswana, Gaborone, Botswana.

Anglo American will slash De Beers’ budgets in response to the diamond-market downturn, the parent company said Friday.

“At De Beers, we are taking a different approach as the business has performed very well operationally. What’s gone against us is the market,” Anglo CEO Duncan Wanblad said at the group’s annual investor update. “Demand and prices for diamonds have fallen as global GDP [gross domestic product] growth has fallen.”

The current downturn is likely temporary, and there are signs the market is “beginning to turn,” Wanblad added.

“Nonetheless, we are focused on streamlining De Beers, reducing the annual overheads by $100 million in a sustainable manner,” the executive continued. “We have also reduced capex [capital expenditure] for next year, with our investment focused on the highest-value opportunities we see in southern Africa from existing assets as well as on the exploration front.”

De Beers has incurred a loss in the second half of 2023 following sales of just $80 million at the October sight, Wanblad explained. Sightholders expected the recent December trading session to be a similar size.

Still, De Beers kept production steady in the second half of this year leading to an inventory buildup and has maintained its production plan of 29 million to 32 million carats for 2024, said Al Cook, the diamond miner’s CEO.

“We need to be careful with [production cutbacks], because a large number of our costs are fixed,” Cook continued at the same investor event. “So we need to avoid doing something that just disrupts mines, which then take a lot to recover from and doesn’t create the cost savings that you really want to drive out of this.”

The company has a “series of levers” it can pull in 2024 should the expected recovery not materialize and is working with partners in producer countries to identify options, Cook added.

Last week, De Beers announced it was changing its organizational structure and executive committee, with executive vice president and chief brand officer David Prager and acting executive vice president of strategy and innovation Ryan Perry set to leave in 2024.

Source: Diamonds.net

Debswana posts 37.5% jump in 9-month diamond sales

Debswana Diamond Company

Rough diamonds sales by Debswana Diamond Company jumped 37.5% in the first nine months of 2022, statistics released by the Bank of Botswana showed Tuesday, driven by steady demand for jewellery.

A joint venture between Anglo American unit De Beers and Botswana government, Debswana sells 75% of its output to De Beers with the balance taken up by state-owned Okavango Diamond Company.

Debswana’s January-September sales rose to $3.578 billion from $2.602 billion a year earlier, data from the central bank showed.

In Botswana’s pula currency, Debswana’s rough diamond sales rose 52.5% to 43.237 billion pula reflecting a stronger dollar in the period.

In dollar and pula terms, the nine-month sales top the company’s full-year results in 2021 when sales totalled $3.466 billion and 38.134 billion pula.

Debswana accounts for almost all diamonds produced in Botswana with Lucara’s Karowe mine being the only other operating diamond mine in the country.

Botswana generates about 30% of its revenue and 70% of its foreign exchange earnings from diamonds.

However, De Beers sees the risk of the market slowing down in the coming months due to a deterioration in global economic conditions, reduced consumer spending and continued Chinese covid-19 lockdowns.

“In line with normal seasonal trends, we anticipate that sales in the final quarter of the year will be affected by the normal temporary closure of cutting and polishing factories for the religious holidays in India,” parent firm Anglo American said last week.

Source: mining.com

De Beers banks on ‘diamonds are for me’

DeBeers Diamonds for Me

Anglo American unit De Beers said its 2019 marketing budget will exceed last year’s figure of $170 million and will focus on the biggest market the United States, where women lavishing diamonds on themselves has boosted sales.

While U.S. demand has held firm, the diamond market has weakened elsewhere and trade tensions and protests in Hong Kong have dented sales in China, the second largest diamond market.

But luxury groups see potential for growth in jewelry demand, as shown by LVMH’s nearly $14.5 billion offer, made public on Monday, to buy Tiffany & Co.

Esther Oberbeck, group head of strategy at De Beers, the world’s biggest diamond producer by value, said in an interview the company was about to launch new marketing campaigns, focused on the U.S. and China.

She did not specify the budget, but said De Beers’ 2019 spend would exceed last year’s $170 million and was the highest in more than a decade.

The campaigns, which she said would concentrate on “self-purchase and the bridal market”, are based on research carried out for De Beers, published on Monday.

It found the share of U.S. women buying their own engagement ring doubled from 7% to 14% over the five-year period 2013-2017 and that women on average spent a third more than men – $4,400 compared with $3,300.

De Beers sells rough diamonds and jewelry through its Forevermark brand.

Its research anticipates the rough diamond market will recover from a period of oversupply as some mines reach their end of their lives, notably Rio Tinto’s Argyle mine in Australia.

Global consumer demand for diamonds rose by 2% in 2018 to $76 billion and, in dollar terms, China and the United States were the fastest-growing regions, both increasing by 5% year on year, it said.

Demand for diamond jewelry in the U.S. rose by 5% to $36 billion, representing just under half of total global diamond jewelry demand, underpinned by “solid macro-economic factors”, the De Beers research found.

Diamonds are still the leading choice for engagement rings, whether between same sex or heterosexual couples.

But demand for diamond jewelry as a gift to mark all kinds of special occasions, including rewards to oneself, now outweighs demand directly related to weddings, De Beers said.

Source: Reuters

De Beers rough diamond sight grows to $575m

De Beers rough diamond

Anglo American’s De Beers the world’s largest rough diamond producer by value, sold $575 million worth of rough diamonds at the fifth sight of this year.

The value is a 6% increase from the $541m sight in the same period last year and 3.7% higher than the $554m sight last month.

De Beers has increased efforts in recent months to find a way to verify the source of diamonds and ensure they are not from conflict area where rough diamonds may have been used to finance violence.

Last month De beers announced it would start selling jewellery made with laboratory grown diamonds.