De Beers Slashes Output Amid Diamond Glut

De Beers Namdeb sorting rough diamonds

De Beers’ production dropped in the third quarter as the miner responded to a decline in rough demand that has left it with an inflated stockpile of diamonds.

Output fell 14% to 7.4 million carats for the period amid planned mine closures and the transition from open-pit to underground mining at its Venetia project in South Africa, parent company Anglo American said Tuesday.

“We continue to produce to weaker market demand due to macroeconomic uncertainty as well as continued midstream weakness,” the miner noted. “Diamond inventory has continued to build during the third quarter due to the subdued market conditions. The elevated inventory levels are not expected to unwind until 2020.”

De Beers reduced production across all the countries in which it operates except Botswana, the miner said. In De Beers’ South African operations, production fell 60% to 535,000 carats due to the lower volumes at Venetia. Production also ceased at the Voorspoed project in the Free State province at the end of last year.

Output shrank 7% to 426,000 carats in Namibia following the shutdown of De Beers’ Elizabeth Bay land operations in September 2018. However, production remained flat in Botswana, at 5.7 million carats, with a 22% planned increase at its Orapa project offset by an 18% decrease at the Jwaneng mine.

In Canada, production dropped 34% to 779,000 carats, largely due to the closure of De Beers’ Victor operation in Ontario, which reached the end of its life earlier this year.

Sales volume jumped 48% year on year to 7.4 million carats, as the company held one more sight than during the same period a year ago. However, overall rough demand remained subdued, the miner explained.

In the first nine months of 2019, the miner produced 23 million carats, down 12% year on year. Its rough-diamond sales remained flat during the period.