De Beers has adjusted its production plan for 2024, reducing it by 3 million carats due to ongoing challenges in the diamond market. This decision follows a decline in sales and profit during the first half of the year, according to Anglo American, De Beers’ parent company.
The mining company now anticipates recovering between 23 million and 26 million carats of rough diamonds this year, down from an earlier forecast of 26 million to 29 million carats. Production had totaled 31.9 million carats in 2023.
The revision comes amidst an increasing gap between diamond supply and demand globally. Discussions with De Beers’ production partners influenced this decision, which was highlighted by the company last week.
Anglo American attributed the adjustment to a prolonged period of reduced demand, elevated inventory levels in the midstream sector, and a focus on managing working capital. Production levels remain contingent upon market conditions, the company emphasized.
The downturn in the diamond market has notably impacted De Beers’ financial performance in 2024. The diamond unit’s revenue for the first half of the year declined by 21% year-on-year to $2.25 billion, Anglo American reported.
Sales volume also dropped by 22% to 11.9 million carats. However, the average price per carat increased slightly to $164 from $163 compared to the previous year, reflecting a higher proportion of higher-value rough diamonds in the sales mix. Nevertheless, the average rough price index for the period decreased by 20% year-on-year.
Underlying earnings decreased by 14% to $73 million due to lower sales and increased unit costs, which were influenced by reduced production levels and the ongoing development of the Venetia underground project in South Africa.
De Beers expects weak demand to persist for the foreseeable future, driven by high midstream inventories. However, it anticipates a gradual recovery as demand from key markets such as the US and India, among others, helps to reduce these inventories over time.
Meanwhile, Anglo American noted changes in UK corporate rules that no longer require shareholder approval for De Beers’ new sales and mining agreements with Botswana, which are currently being finalized.
