BY BONNIE MODIAKGOTLA
De Beers, the diamond-mining juggernaut has lowered its production targets following two successive quarters of falling production amid a challenging operating environment, the company said in the latest quarterly production report.
The year is proving to be a trying time for De Beers, which has been recording lower output this year at its diamond mines, made even worse by weakness in diamond sales. De Beers has mining operations across Africa and North America – with Botswana being the biggest source of rough diamonds for the company. Production in Botswana is carried through Debswana ÔÇô a joint venture between De Beers and Botswana government that operates four diamond mines in the country (Orapa, Letlhakane, Damtshaa and Jwaneng).
Second quarter figures show that De Beers’ diamond production declined by 14 percent to 7.97million carats, driven by reductions in Botswana and South Africa. The mining giant in the first quarter had put its production output guidance for the year between 31 to 33 million, but has since revised this to the low rung of the range. The revised production is said to be a response to weaker trading conditions.
Debswana production slumped to 5.7 million carats, down by 9 percent as result of output decrease at Orapa mine, which dropped by 23 percent to 2.5 million carats as the mine went through a planned shutdown that affected production. However, Debswana’s flagship Jwaneng mine – the largest and most valuable mine in the world ÔÇô held it down for De Beers as it delivered 3.2 million carats, up by 7 percent as a result of increase in treated tonnes.
Namdeb Holdings, another joint venture between De Beers and the government of Namibia, saw output decrease in the second quarter to 335,000 carats, down by 35 percent. Namdeb Holdings extracts diamonds from both land and ocean. De Beers says the reduction in output was a result of the land operation transitioning to care and maintenance.
In South Africa, where the group operates De Beers Consolidated Mines (DBCM), diamond production was down 45 percent, unearthing 571,000 carats. The decrease in production was due lower mined volumes Venetia as it moves from open cut mining to underground operations. The De Beers Consolidated Mines is made up of Venetia and Voorspoed mine – which is placed under care and maintenance since last year in preparation for closure.
Production also decreased by 9 percent to 1.1 million carats at the Canada mines down to lower grades from Gahcho Kue. De Beers also operates Victor mine in Canada, which reached its lifespan during the second quarter.
De Beers reports that its rough sales volumes were 9 million carats (8.3 million carats on a consolidated basis) from three sales cycles of the second quarter of the year, compared with 10 million carats (9.4 million carats on a consolidated basis) from the same sales cycles of corresponding period.
“Demand for rough diamond remains subdued as a result of challenges in the midstream with higher polished inventories, and caution due to macro-economic uncertainty, including the US-China trade tensions,” De Beers said in the report.
Meanwhile, De Beers’ provisional rough diamond sales for the fight sight, also known as sales cycle, hit a 20-month low and continued the diminishing sales volumes recorded since beginning of the year. With about five sales cycles for the year concluded, De Beers has so far raked $2.38 billion (P25 billion) in the first half year sales, an 18 percent slump from the previous corresponding period last year.
The diamond-mining giant holds ten Global Sightholder Sales and Auction Sales every year in Gaborone and the sights or auction sales are restricted to its top 80 Sightholders who buy the diamond packages at a price determined by De Beers.