Diamond glut prompts De Beers to slash production


De Beers has lowered its production forecast for this year, noting that weakness in the diamond trade negatively affected its performance in the second quarter. 
Sales volume slumped 10% to 9 million carats in the three months ending June 30 due to an oversupply of goods, Anglo American, De Beers’ parent company, reported Thursday the 18th of July. In light of that, it now expects to recover about 31 million carats for 2019, compared to its previous plan of 31 million to 33 million carats.

Demand for rough diamonds remains subdued as a result of challenges in the midstream with higher polished inventories, and caution due to macroeconomic uncertainty, including the US-China trade tensions,” the company explained.

De Beers’ sales value dropped 16% to $1.39 billion from the three sales cycles the company held during the quarter, according to Rapaport calculations. The company’s rough-price index — reflecting like-for-like prices — fell 4% year on year in the first half, and slipped 3% compared with the second half of 2018. Weak demand prompted the miner to reduce prices of lower-value stones at the June sight.

The average selling price for the first half also slid 7% to $151 per carat, reflecting the lower like-for-like prices and a shift in the sales mix.

Mining output fell 14% to 7.7 million carats in the second quarteras we continue to produce to market demand,” and because of lower volumes at the Venetia mine, Anglo American added. The company’s only deposit in South Africa is currently shifting from open-pit to underground operations, leading to a 38% drop in production at the site to 571,000 carats. The other De Beers mine in the country, Voorspoed, has now closed.

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Source Rapaport