'Diamond market will regain its sparkle'
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JOHANNESBURG - Anglo American chief executive Mark Cutifani is optimistic that the diamond market will sparkle during the fourth quarter after severe Covid-19-related sales disruptions.
Cutifani told journalists yesterday that the group was positive that the diamond market has recovered after sales rebounded in China in the quarter to June.
“In May and June, we have seen sales exceed sales of May and June 2019, not by a small measure, but by a material amount,” Cutifani said.
“The diamond sales and the enthusiasm for the product is as strong as we have ever seen. From our point of view, if China is an indicator, then we are in a good space.”
Anglo American said the Covid-19 outbreak had had a major impact on the diamond market, affecting all stages of the supply chain and cutting rough diamond sales volumes by 45 percent at De Beers during the six months to the end of June.
Cutifani said the disruptions led to a $1.1 billion (R18.14bn) fall in underlying earnings before interest, taxes, depreciation and amortisation.
“Yes, this is a tough moment for the diamond industry, but all of our commodities at some stage have had tough moments,” he said.
“Diamonds are not a commodity; they are part of the luxury market. Look at the rest of the luxury market around the world: it is a tough place to be. But we are here for the long term.”
Cutifani said De Beers had work to do in terms of transforming.
“There is no doubt that the current situation is speeding up what we need to do,” said Cutifani.
He said the pandemic had weighed heavily on the group's financial and operational performance during the six months to the end of June. “This year has been nothing like I have ever seen in my 43 years in mining.”
The group said Covid-19 has had a material impact on group production, with varying degrees of lockdown being the main driver for the 11 percent overall reduction in output.
It said revenue declined 16 percent following the explosion at its processing plant in Rustenburg and two incidents underground that affected Australian metallurgical coal’s Moranbah and Grosvenor, and longwall moves at Grosvenor, Grasstree and Met Coal.
In May, the company set out its plans to exit its remaining South African thermal coal assets.
“We are well into the process and the government has been very supportive. That has been positively received, particularly in the context of a South African listing if we go the demerger route, which is most likely,” said Cutifani.
The interim dividend was $0.28 per share, which was consistent with the company’s 40 percent payout policy.