De Beers sightholders are bracing for lower rough supply for the rest of 2019 as the miner reduces its production and fulfills its commitments to support local manufacturing in Africa.
The company expects production to drop as its Victor mine in Canada closes and the Venetia operation in South Africa shifts from open-pit to underground mining. It has predicted output of 31 million to 33 million carats this year, compared with 35.3 million carats in 2018.
A smaller quantity of rough diamonds will therefore be available during the new sales period starting next month compared with the current one, the miner confirmed. It informed sightholders of their provisional allocations ahead of last week’s April sight, and will decide their final allotments before the next sale begins on May 13.
De Beers allocates rough diamonds based on clients’ purchases in the previous intention-to-offer (ITO) period — a policy known as “demonstrated demand.” Prospective sightholders tell De Beers how much rough they will require during the period — their “intention to offer” — with the miner subsequently informing them how much they will receive.
Last week’s sight was the last of the current ITO period, which began a year ago. The new period will run from the May sight until the end of December, featuring only seven sights rather than the usual 10, as De Beers is moving to a calendar-year ITO. Because of that shorter period, total supply will be lower, but it will also decline on a per-sight basis, said David Johnson, De Beers’ senior manager for media and commercial communications.