De Beers assessing options to lower production amid high midstream inventory levels

Diamond miner De Beers maintains its full-year production guidance at between 23-million and 26-million carats, but says it is actively assessing options with its partners to reduce production going forward, as the midstream continues to hold higher-than-normal levels of inventory, while the expectation for a recovery remains protracted.

In a report on its production and trading performance for the third quarter ended September 30, the miner says trading conditions remained challenging throughout the quarter, in light of the higher-than-normal midstream inventory levels and the prolonged period of depressed consumer demand in China.

In response, De Beers merged its seventh and eighth sales cycles, or sights, into one event.

Further, for the fourth quarter, the dates for sights nine and ten were brought forward, all with a focus on supporting sightholders in navigating midstream trading conditions as they head towards the end-of-year retail selling season.

Rough diamond sales in the combined sight seven and eight will be reflected in the fourth-quarter production report, as sales from the event continued beyond the end of the third quarter.

Consequently, rough diamond sales in the third quarter totalled 2.1-million carats from one sight, generating $213-million in revenue, compared with 7.4-million carats sold in three sights in the third quarter of 2023, generating $899-million in revenue.

Sales were also lower than the 7.8-million carats sold in three sights in the second quarter of this year, generating $1.04-billion in revenue.

De Beers notes that the year-to-date consolidated average realised price increased by 4% to $160/ct, reflecting a larger proportion of higher-value rough diamonds being sold, partially offset by an 18% decrease in the average rough price index.

The average price for the third quarter decreased by 4% year-on-year to $128/ct. The average price was also 10% lower compared with the second quarter of this year.

"De Beers Jewellers delivered consistent performance with growth in design-led pieces, while bridal and solitaire demand remained challenged by macroeconomic headwinds and slower Chinese recovery. Forevermark's global operations ramped down, consistent with the strategy to focus the brand on India.

"New natural diamond marketing collaborations were established with world-leading diamond jewellery retailers: Signet, in the US, and Chow Tai Fook, in China, with further opportunities planned. The collaborations focus on driving long-term desirability for natural diamonds in two of the world’s leading consumer countries for natural diamonds. The collaborations will also benefit from promotional messages being amplified through the wide reach of these leading retail businesses," the diamond miner points out.

De Beers has also announced the introduction of DiamondProof, a new device to be used on the jewellery retail counter for rapidly distinguishing between natural diamonds and lab-grown diamonds.

The miner says the device is aimed at supporting retailers in communicating the attributes of natural diamonds, providing customers with enhanced confidence in the authenticity of their natural diamond purchase and deterring undisclosed lab-grown diamonds from entering the natural supply chain.

PRODUCTION
De Beers' rough diamond production for the third quarter had decreased by 25% year-on-year to 5.6-million carats, reflecting a production response to the prolonged period of lower demand, higher-than-normal levels of inventory in the midstream and a continued focus on managing working capital.

Group production for the nine months to September 30 was down 21% year-on-year to 18.88-million carats.

The Botswana operations recorded a 32% year-on-year decrease to four-million carats for the third quarter, as actions to lower production at Jwaneng were delivered.

Production in Namibia decreased by 14% year-on-year to 500 000 ct for the quarter, reflecting intentional action to lower production at Debmarine Namibia, but partially offset by planned higher-grade mining and better recoveries at Namdeb.

The South African operations also delivered 500 000 ct for the third quarter – a 41% year-on-year increase as the Venetia underground operation ramped up.

Production in Canada, meanwhile, decreased by 11% to 600 000 ct owing to the planned treatment of lower-grade ore.

Year-to-date production in Botswana was down 26% year-on-year to 13.69-million carats, while output from the Namibian operations had decreased by 6% year-on-year to 1.65-million carats for the nine months to September 30.

Year-to-date production in Canada decreased by 5% year-on-year to 1.92-million carats, while South African production had increased by 3% year-on-year to 1.61-million carats for the nine-month period to September 30.