De Beers total revenue declined 21 percent to $2.2 billion in the first half of the year, compared with $2.8 billion in the same period last year. Rough diamond sales dropped to $2 billion and total rough diamond sales volumes decreased by 22 percent to 11.9 million carats, said the parent company Anglo American in its interim results recently.
De Beers announced to cut its expected annual production plan for the second time this year by 3 million carats from 26 million-29 million carats to 23 million-26 million carats. In the spring of this year, De Beers had scaled back the production target from the originally announced 29 million-32million carats. This follows the finalisation of discussions with the group’s production partners, as the business responds to the prolonged period of lower demand, higher than normal levels of inventory in the midstream, and a focus on working capital. Production remains subject to trading conditions.
According to the miner, weaker demand is expected to continue for some time, given the prevailing levels of midstream inventories. This is expected to be followed by a gradual recovery as demand from the United States, India and other countries draws down midstream inventories. Retailer re-stocking is expected to be supported by new natural diamond marketing, increasing engagement rates, improving macro-economic conditions and consumer confidence.
The wholesale prices of lab-grown diamonds continue to fall, exacerbated by ballooning stocks of lab-grown diamonds in India. In turn, lab-grown diamond retail prices remain on a downward trajectory, and it is expected that these trends will further reinforce consumers’ understanding of the fundamental differences between lab-grown and natural diamond jewellery. Given the rapidly deteriorating economics of selling lab-grown diamonds as their prices continue to drop, there are also signs that retailers in the United States are returning their focus to natural diamonds, said De Beers.
De Beers communicated its new Origins strategy at the end of May, with a focus on four key pillars underpinned by a plan to streamline the business sustainably by reducing overhead costs by $100 million per year. These comprised i) focusing upstream investments on the major projects that will deliver the highest returns; ii) integrating the midstream to deliver greater efficiency; iii) resetting the downstream by reinvigorating category marketing and evolving proprietary brands through scaling up De Beers Jewellers and refocusing Forevermark solely on the fast-growing Indian market; and iv) pivoting synthetics, with Lightbox suspending production of lab-grown diamonds for jewellery allowing Element Six to focus on its position as a world-leading provider of synthetic diamond technology solutions.
“While we expect the challenging rough diamond trading conditions to continue in the near-term, the actions we are taking will support the recovery in natural diamond demand and position De Beers well for the future,” commented De Beers CEO Al Cook. (Photo courtesy: De Beers)
29-07-2024
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