De Beers said sales were marginally up 6.25 percent, or $25 million, compared with sales of $400m achieved in cycle 9 of 2019. Photo: Reuters
De Beers said sales were marginally up 6.25 percent, or $25 million, compared with sales of $400m achieved in cycle 9 of 2019. Photo: Reuters

De Beers' rough diamond sales drop to $425m in latest cycle

By Sandile Mchunu Time of article published Dec 19, 2019

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DURBAN – JSE-listed diversified mining company Anglo American plc reported a 21.88 percent decline in rough diamond sales from De Beers in cycle 10 to $425 million (R6.12 billion).

The sales were a far cry from the $544m recorded during the similar cycle last year.    

De Beers said sales were, however, marginally up 6.25 percent, or $25m, compared with sales achieved in cycle 9 of 2019 of $400m.  

Anglo American owns an 85 percent stake in De Beers. 

De Beers chief executive Bruce Cleaver said group sales improved after some price stability in the market.

“Following continued polished diamond price stability in the lead-up to the final sales cycle of the year, we saw further signs of steady demand for rough diamonds during cycle 10,” Cleaver said. 

In January, De Beers said rough diamond sales fell 25 percent in the first cycle of the year, signalling weak demand for smaller and cheaper stones.

The company reported that rough diamond sales had fallen to $505m, down from $672m a year earlier. 

In a quarterly update to the market released in October, Anglo American said De Beers’ diamond production declined 14 percent to 7.4 million carats in the quarter to the end of September, due to planned mine closures  in South Africa and Canada.

The group said it continued to weather headwinds as a result of weaker market demand due to macroeconomic uncertainty, as well as continued midstream weakness.

South Africa’s production declined the most. It was down by 60 percent to 0.5 million carats during the quarter due to lower mined volumes at Venetia. 

In Canada, production declined by 34 percent to 0.8 million carats, primarily due to the closure of Victor, which reached the end of its life in the second quarter of 2019. 

In Namibia, Namdeb’s production decreased by 7 percent to 0.4 million carats, as the Elizabeth Bay land operations were placed on care and maintenance in the fourth quarter of 2018.

However, in Botswana De Beers experienced mixed results during the quarter. Debswana’s production was flat at 5.7 million carats, and at Orapa production increased by 22 percent due to a planned increase in the grade of material treated, but this was offset by an 18 percent decrease at Jwaneng due to planned lower grade. 

Earlier this month, reports emerged that Anglo American announced at an investor presentation that it intended to cut diamond production by De Beers by a million carats for the 2020 and 2021 financial years. This is after De Beers cut prices by about 5 percent in November. 

Anglo American shares closed 1.74 percent lower at R406 on the JSE on Tuesday.

BUSINESS REPORT

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