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Diamond Glut Prompts De Beers to Slash Production
Jul 18, 2019 10:50 AM
By Rapaport News
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RAPAPORT...
De Beers has lowered its production forecast for this year,
noting that weakness in the diamond trade negatively affected its
performance in the second quarter.
Sales volume slumped 10% to 9 million carats in the three
months ending June 30 due to an oversupply of goods, Anglo American, De Beers’
parent company, reported Thursday. In light of that, it now expects to recover about
31 million carats for 2019, compared to its previous plan of 31 million to 33
million carats.
“Demand for rough diamonds remains subdued as a result of
challenges in the midstream with higher polished inventories, and caution due
to macroeconomic uncertainty, including the US-China trade tensions,” the
company explained.
De Beers’ sales value dropped 16% to $1.39 billion from the
three sales cycles the company held during the quarter, according to Rapaport
calculations. The company’s rough-price index — reflecting like-for-like
prices — fell 4% year on year in the first half, and slipped 3% compared with
the second half of 2018. Weak demand prompted the miner to reduce prices of
lower-value stones at the June sight.
The average selling price for the first half also slid 7% to
$151 per carat, reflecting the lower like-for-like prices and a shift in the
sales mix.
Mining output fell 14% to 7.7 million carats in the second
quarter “as we continue to produce to market demand,” and because of lower volumes
at the Venetia mine, Anglo American added. The company’s only deposit in South
Africa is currently shifting from open-pit to underground operations, leading
to a 38% drop in production at the site to 571,000 carats. The other De Beers mine
in the country, Voorspoed, has now closed.
Output in Botswana fell 9% to 5.7 million carats, reflecting
a planned shutdown at the Orapa mining unit. Lower grades at Gahcho Kué
in Canada contributed to a 9% decline in production in that country, for a
total of 1.1 million carats.
Image: A Canadian rough diamond in the palm of a hand at De Beers’ Global
Sightholder Sales in Botswana. (Ben Perry/Armoury Films/De Beers)
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Tags:
Anglo American, Botswana, Canada, De Beers, Gahcho Kué, mining, Orapa, oversupply, Production, Rapaport News, rough, Rough Diamonds, South Africa, venetia, Voorspoed
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