Tuesday, October 4, 2022

De Beers sparkles in Q1:2022

The diamond mining juggernaut De Beers increased rough diamond production in the first quarter of the year, thanks to strong operational performance and higher planned levels of production to meet continued strong demand for rough diamonds, the company revealed this week in a quarterly production report.

According to Anglo American, De Beer’s major shareholder, rough diamond production surged by 25 percent to 8.9 million carats, compared to last year’s first quarter production of 7.1 million carats.

As has been the case over the years, the increase in diamond output was propelled by robust performance from Botswana based mines, accounting for nearly 70 percent of total production, with the first quarter output jumping by 25 percent to 6.2 million carats on the back of increased processing at both Orapa and Jwaneng mines. The largest diamond mine by value, Jwaneng, delivered 3.6 million carats while Orapa mine, the biggest diamond mine by area, produced 2.5 million carats.

There were improvements in other De Beers owned mines except for Canada. In  Namibia production increased by 33 percent to 0.5 million carats primarily driven by higher recovery from the crawler vessels, due to lower planned maintenance of the Mafuta and the speedy delivery of the new diamond recovery vessel, the Benguela Gem, according to the production report.

In South Africa, production was up by 46 percent to 1.7 million carats due to the treatment of higher-grade ore from the final cut of the open pit. However, output in Canada decreased by 15 percent to 0.6 million carats, primarily as a result of treating lower grade ore.

Mark Cutifani, chief executive officer of Anglo American, said robust demand for rough diamonds continued into the first quarter following sturdy growth in consumer demand over the holiday season, with rough diamond sales totalling 7.9 million carats from two Sights, compared with 13.5 million carats from three Sights in the first quarter of 2021, and 7.7 million carats from three Sights in the fourth quarter of 2021.

De Beers, which is 85 percent owned by Anglo American and 15 percent by Botswana government, sells rough diamonds through ten Global Sightholder Sales and Auction Sales. In the first sale of the year, De Beers sold $660 million worth of rough diamonds, followed by $652 million in the second sight before softening to $565 million in the third sales circle. In total,  De Beers realised $1.87 billion in first quarter sales, higher than the $1.66 billion gained in the same quarter last year.

“On the back of robust demand for rough diamonds in 2021 and jewellery sales in the first quarter of 2022 and reflecting continued year-on-year growth in consumer demand for diamond jewellery, demand for De Beers Group rough diamonds remained strong in the third sales cycle of 2022,” said Bruce Cleaver, CEO of De Beers Group.

Last year, De Beers staged a strong recovery, selling $4.81 billion of rough diamonds in all of the ten sales circles, eclipsing the $2.79 billion  earned in 2020 after COVID-19 roiled the diamond industry, reducing the gains made in 2019 after the diamond miner sold $4 billion worth of rough diamonds. If strong demand continues through out the year, the world’s top producer of diamonds by value could reach levels close to the $5.39 billion recorded in 2018 and $5.31 billion in 2017. De Beers’ is yet to top the record setting $5.6 billion reached in 2016.

However, Cleaver has warned that as De Beers heads into the seasonally slower second quarter of the year, diamond businesses are adopting a more cautious and watchful approach in light of the war in Ukraine and associated sanctions, as well as Covid-19 lockdowns in China.

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