De Beers sees its rough diamond sales in third sales cycle reduced by 20%
JOHANNESBURG - DE BEERS, the world’s biggest diamond producer by volume, had 20 percent lower rough diamond sales during its third sales cycle of 2021 compared to the earlier cycle, on Covid-19 pandemic disruptions.
De Beers, an Anglo American plc subsidiary, yesterday reported $440 million (R6.4 billion) in sales during the third sales cycle, down from $550m in the second sales cycle of 2021.
Chief executive Bruce Cleaver said following a good holiday season and that trend continuing during the first quarter of 2021, De Beers had again seen solid demand for rough diamonds as it began a traditionally quieter period of the year for the diamond industry. “Sales were in line with expectations and both market sentiment and overall industry conditions remain positive.
“However, with pandemic developments in Europe and Mumbai’s recent lockdown resulting in the Bharat Diamond Bourse being closed, it is clear that we will continue to see challenges relating to Covid-19,” Cleaver said.
Bharat, India’s largest diamond trading hub, was shut after the government of that country imposed a partial lockdown until the end of April to contain the spread of the second wave of the Covid-19 pandemic.
De Beers, which hosts 10 sales cycles a year, said owing to the restrictions on the movement of people and products in various jurisdictions around the globe, it had continued to implement a more flexible approach to rough diamond sales during the third sales cycle of 2021, with the sight event extended beyond its normal week-long duration.
The group said the $440m was a provisional diamond sales figure and represented the expected sales from March 22 to April 6 and was subject to adjustment based on final completed sales. According to a report released last month by global risk assessment firm Moody’s, De Beers was providing stability to the diversified portfolio of its parent, Anglo American, and was also improving its business profile.
Moody’s said De Beers provided geographic diversification for Anglo’s business as it produced the bulk of its diamonds in Botswana, an A2 stable-rated nation, which helped to reduce Anglo’s reliance on assets in South Africa, which was rated Ba2 negative. “We view the high exposure to profit and cash flow generated by assets in South Africa as a constraint for Anglo’s rating. “Without De Beers, South African assets would contribute an even greater share of Anglo’s Ebitda,” Moody’s said.
Moody’s pointed out that diamonds’ geographical demand breakdown differed from metals such as copper and iron ore, where China accounts for 50 percent or more of global demand. The US accounted for about 45 percent of diamond demand, while China accounts for about 30 percent. Anglo American plc shares declined by 0.22 percent to close at R598.61 on the JSE yesterday.