Thursday, October 29, 2020

De Beers reduces 2020 production due to Covid-19

The world’s leading diamond producers De Beers Group, owned by Anglo American and the Botswana Government has since reduced its production guidance for 2020 in line with anticipated demand by seven million carats to 25-27 million carats, with lower volumes at all its operations.

According to De Beers through its parent company, Anglo American, late this past Thursday, lockdown measures have significantly impacted diamond production in southern Africa, manufacturing in India and retail operations in the United States, while consumer demand has returned to the Chinese market. 

Most of the sites around the world are continuing to operate, with the company’s focus on safety reflected through appropriate health, hygiene and distancing measures. 

Anglo American Chief Executive, Mark Cutifani, said, “we are also implementing a number of cash improvement measures, including operating cost reductions of at least $0.5 billion and an approximately $1.0 billion reduction to our 2020 capital expenditure guidance. This further builds on our already robust current liquidity position of $14.5 billion. We are acting to protect our optionality through this uncertain period and will continue to act in the best interests of our shareholders, our employees, customers and our broad range of stakeholders across society.”

Meanwhile, in its first quarter production report late this past week again, for the three months to March 31st, overall rough diamond production by De Beers was in line with the prior year at 7.8million carats, with limited impact from Covid-19 measures introduced at the end of the quarter in producer countries. 

However, unlike in other jurisdictions, in its Botswana operations, production decreased by five percent to 5.6million carats driven by a seven percent decrease at the Orapa diamond mine, while production at Jwaneng fell four percent owing to planned lower grade.  

South Africa diamond production increased by 97 percent to 0.8million carats as the final ore from the Vanetia Mine opencast is mined prior to transitioning to underground mining. 

In Namibia, diamond production increased by six prevent to 0.5milion carats owing to planned higher grade at the marine operations. In Canada, diamond production rolled down by 19 percent primarily due to the closure of the Victor mine, which reached the end of its lifespan last year. 

Rough diamond sales totalled 8.9 million carats from two sale cycles during this first quarter before the next cycles were suspended owing to Covid-19 pandemic. This was an increase compared with the first quarter of 2019. 

Anglo American has indicated that the prevailing measures to deal with Covid-19 and economic uncertaininty are likely to result in delays to both project approvals and commissioning of certain in progress projects.

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