De Beers takes more beating from its eighth cycle sale
JOHANNESBURG – Diversified mining conglomerate Anglo American took a beating on the JSE on Thursday as its diamond producing subsidiary De Beers said that its eighth sales cycle of 2019 slid further into the red, despite concessions made to buyers to either delay or decline purchases of stock already in their hands.
De Beers said the latest sales value of $295 million (R4.51 billion) of rough diamonds sold to selected buyers in Botswana last month was the lowest by far since it began releasing sales data in 2016.
Chief executive Bruce Cleaver said the miner was struggling to maintain diamond sales growth in the face of subdued economic conditions, a slowdown in China, protests in Hong Kong have weakened diamond demand along with a considerable slowdown in sales ahead of the upcoming Diwali festival in India this month
“As we approach what is traditionally a quieter time of year for the diamond industry during the Diwali holiday, we have again offered our customers flexibility during this sales cycle,” Cleaver said.
The company has decided to let buyers reject stones. This will help reduce the oversupply in the market, which should eventually allow prices to recover, but that still does not help current sales figures.
The sales made at the latest round are progressively lower than the $484m sold a year earlier.
This year, De Beers offered its buyers greater flexibility to reject or delay purchases, to cope with a weaker diamond market and a glut of stones.
“The diamond market is clearly weak and this appears to be now impacting the higher end of the market as well, which had previously held up,” an analysts said.
Anglo American’s trading on the JSE was as a result subdued, it lost more than 2 percent in intra-day trade as the markets grasped the implications of the low sale of rough diamonds.
The level of trade on resources though was in tempo, with stocks such as Kumba, Anglo, BHP, Glencore, South32 down 4 to 5 percent on the back of US manufacture data, trade wars, threat of capital sanctions, and attack by President Donald Trump again on Fed policy.
FNB analyst, Wayne McCurrie, on his twitter timeline warned that resources stocks were generally under an onslaught.
All share index down 0.4%. Resources again on back of poor international data and trade war etc. Anglo released de beers sales that looked ok, but share down along with other resource shares.— Wayne McCurrie (@WayneMcCurrie) October 3, 2019