De Beers sees diamond sales sparkling in early 2021 trade
JOHANNESBURG - DE BEERS, the world's biggest diamond company by value, expects to report $650 million (R9.7 billion) in rough diamond sales for its first cycle of 2021, following strong diamond jewellery sales over the holiday season in the US.
Chief executive Bruce Cleaver said on Tuesday that rough diamond sales were also supported by expected demand ahead of the Chinese New Year and Valentine's Day.
“While risks to recovery as a result of ongoing restrictions on the movement of both people and goods persist, we have been encouraged by demand conditions,” Cleaver said.
De Beers, which is 85 percent owned by Anglo American, said sales for the first cycle of 2021 were 18 percent higher than the $551m recorded a year ago, and 44 percent stronger than the $452m rough diamond sales in the tenth and last cycle of 2020.
The group, which operates mines in South Africa, Botswana, Namibia and Canada, holds 10 sales cycles annually.
It said the figures for the first cycle of 2021 were provisional due to a change in the company's approach to diamond sales, because of pandemic-related movement restrictions around the globe.
The figures were based on expected sales between January 18 and February 2, said the group.
Last Thursday, parent company Anglo American plc lowered the 2021 output guidance for De Beers to between 32 million and 34 million carats, from the previous target of 33 million to 35 million carats, citing ongoing operational challenges, and expected lower production from the final cut at its Venetia mine in Limpopo.Anglo said the 2020 output had declined by 18 percent to 25.1 million carats compared with 30.7 million carats a year earlier.
De Beers' production in Botswana fell by 29 percent year-on-year to 16.56 million carats, while its operations in Namibia produced 15 percent lower at 1.45 million carats. The Canadian operations produced 3.32 million carats – also a 15 percent year-on-year decline. De Beers' South African operations, however, increased production by 96 percent year-on-year to 3.77 million carats.
The group recorded a 14 percent decline in output during the December quarter to 16.7 million carats after it reduced production in response to lower demand for rough diamonds caused by the Covid-19 pandemic, and challenges at the Orapa mine in Botswana. However, the group said the demand for rough diamonds had shown positive trends in the fourth quarter of 2020.
“The indications are that encouraging levels of consumer demand for diamond jewellery continued during the holiday season in the US, while China also performed well,” said Anglo.
Chief executive Mark Cutifani also said the demand was robust in 2021.
“As we begin 2021, we are continuing to see positive demand for rough diamonds, supported by consumer demand for diamond jewellery in the holiday selling season. While it is still too early to signal a strong and sustained recovery, the resilience in demand is very encouraging.”
Anglo's share price rose 0.19 percent to close at R496.55 on the JSE yesterday.