Recently, Anglo American plc presented production report for the second quarter (2Q) ended 30 June 2024. At the point, Duncan Wanblad, Chief Executive of Anglo American, said: “De Beers’ diamond production reflects the lower revised guidance announced in our first quarter production report. Trading conditions became more challenging in the second quarter as Chinese consumer demand remained subdued.
With higher than normal levels of inventory remaining in the midstream and an expectation for a protracted recovery, we are therefore actively assessing options with our partners to further reduce production to manage our working capital and preserve cash.”
Rough diamond production decreased by 15% to 6.4 million carats, primarily reflecting the lower production guidance announced in the first quarter production report in response to the higher than normal levels of inventory in the midstream, and the expectation for a protracted recovery in demand.
In Botswana, production decreased by 19% to 4.7 million carats, driven by intentional lower production from short-term changes in plant feed mix at Jwaneng to process existing surface stockpiles. Production at Orapa was broadly flat.
Production in Namibia decreased by 8% to 0.6 million carats, reflecting planned vessel maintenance at Debmarine Namibia, partially offset by planned mining of higher grade areas at Namdeb. In South Africa, production increased by 8% to 0.5 million carats, reflecting the benefit of processing increased volumes of higher grade underground ore as the Venetia mine transitions underground.
Production in Canada was broadly unchanged at 0.7 million carats. Demand for rough diamonds recovered slightly at the start of 2024 following the cessation of the voluntary moratorium on rough diamond imports into India in late 2023, and improved demand for diamond jewellery in the United States year-end retail selling season.
However, with midstream polished inventories remaining higher than normal and continued cautious restocking from retailers, demand for rough diamonds deteriorated in the second quarter of the year. Market conditions are expected to reflect a protracted recovery in demand.
Consequently, rough diamond sales in Q2 2024 totalled 7.8 million carats (7.3 million carats on a consolidated basis) from three Sights, compared with 7.6 million carats (6.4 million carats on a consolidated basis) from two Sights in Q2 2023, and 4.9 million carats (4.6 million carats on a consolidated basis) from two Sights in Q1 2024.
The H1 2024 consolidated average realised price remained broadly flat at $164/ct (H1 2023: $163/ct), reflecting a larger proportion of higher value rough diamonds being sold, offset by a 20% decrease in the average rough price index as compared to H1 2023.
Rough diamond Sight sale announcements will cease following this Q2 production report as De Beers will report this information on a quarterly basis. Refer to the table on the following page for the quarterly Sight sale information.
2024 Guidance
Production guidance for 2024 is unchanged at 26-29 million carats; however, with higher than normal levels of inventory remaining in the midstream and an expectation for a protracted recovery, we are actively assessing options with our partners to further reduce production to manage our working capital and preserve cash.
Unit cost guidance for 2024 is unchanged at c. $90/carat. (1) Consolidated sales volumes exclude De Beers Group’s JV partners’ 50% proportionate share of sales to entities outside De Beers Group from the Diamond Trading Company Botswana and the Namibia Diamond Trading Company, which are included in total sales volume (100% basis).
(2) Production is on a 100% basis, except for the Gahcho Kué joint operation which is on an attributable 51% basis. (3) Unit cost is based on De Beers’ share of production volume. 2024 unit cost guidance was set at c.19 ZAR: USD.
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