Wednesday, September 30, 2020

De Beers rough production down 5% in Q3:2018

De Beers’ diamond production in the third quarter eased due to combinations of expected lower grades and a shutdown at some mines as the mining giant upgrades its processing plant ahead of its transition from open cut to underground mining. This was revealed in Anglo American third quarter production report released Tuesday.

Anglo American through 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 – which operates four diamond mines in the country (Orapa, Letlhakane, Damtshaa and Jwaneng).

As usual the diamond miner could count on its Botswana operations even though production was down 6 percent to 5.7 million carats in response to planned processing of lower grade material at the flagship Jwaneng mine – the largest and most valuable mine in the world. As a result, Jwaneng delivered 3.1 million carats, down by 10 percent from corresponding period in the prior year.

Consolidated production figures from Orapa, Letlhakane and Damtshaa slightly retreated 1 percent to 2.6 million carats. Overall production from Botswana totalled 5.7 million carats, a contribution of 66 percent to De Beers’ total diamond production.

Namdeb Holdings, another joint venture between De Beers and the government of Namibia, maintained output in Q3 2018 to half a million carats, same as Q3 2017. Namdeb Holdings extracts diamonds both from land and ocean, with the ocean operations leading in production output. Still production largely increased 27 percent for land based operations, driven by access to consistently higher grades, while there was 9 percent from Debmarine, the ocean based operations.

In South Africa, where the group operates De Beers Consolidated Mines, diamond production was down 14 percent, unearthing 1.3 million carats compared to 2017’s third quarter production of 1.5 million carats. The decrease in production was also due to a planned shutdown at Venetia to upgrade the processing plant as the mining giant plans a leap from open cut mining to underground operations. The De Beers Consolidated Mines is made up of Venetia and Voorspoed mines.

In contrast, there was strong rebound at its De Beers’ Canada mines driven by high grades from Victor mine which extracted 251, 000 carats, up by 32 percent from the previous corresponding period. This was a strong performance from Victor mine which is nearing its lifespan.  The Gahcho Kue production was slightly down at 927, 000 carats, a 0.3 percent decline from Q3 2017 production. Overall, production from Canadian mines increased 5 percent to 1.2 million carats.

De Beers reports that its rough sales volumes were 5 million carats (4.6 million carats on a consolidated basis) from two sales cycles in Q3 2018, compared with 6.9 million carats (6.5 million carats on a consolidated basis) from two sales cycles in Q3 2017.

“Rough sales volumes were down as a result of Sightholders being given the opportunity during the seventh Sight of 2018 to re-phase the allocation of some smaller, lower value rough diamonds. Rough sales revenues were broadly in line with Q3 2017,” the company revealed in report.

The mining giant holds ten Global Sightholder Sales and Auction Sales every year in Gaborone and the sights or auction sales are restricted to its sightholders who buy the diamond packages at a price determined by De Beers. With all the 8 sights done, De Beers has so far sold rough diamonds worth $4.4 billion, a slight figure above $4.39 billion in the same period last year.

De Beers’ full year production guidance remains unchanged at 34 to 36 million carats, subject to trading conditions.

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