De Beers Cuts Production Guidance by 10%
April 23, 24
(IDEX Online) - De Beers has cut its production guidance for this year by 10 per cent.
It expects output to be down by around 3m carats from its original forecast of 29m - 32m carats to 26m - 29m carats, according to the Q1 2024 Production Report published by parent company Anglo American today (23 April).
Anglo also announced that first quarter output was down 23 per cent to 6.9m carats, by far the biggest percentage drop among its mining and minerals sectors. Second-placed platinum group metals and manganese ore were down by 7 per cent.
De Beers has increased its forecast of unit cost guidance by 12 per cent to around $90 per carat.
Anglo said: "Production is lowered in response to the higher than average levels of inventory in the market and the expected gradual recovery in rough diamonds through the rest of the year, with the unit cost, which is based on De Beers' share of production volume, adjusted accordingly."
The $2.2bn underground transition of its Venetia mine, in South Africa, was continuing it said, and production there is expected to ramp-up over the next few years.
De Beers saw sales slump last year - down 36 per cent to $3.63bn, per carat prices down 25 per cent to $147 - and it made a loss in the second half of 2023.
Output at its mines in Botswana, Namibia, South Africa and Canada fell by 8 per cent to 31.9m carats.
It sold just 24.7m carats during the year (down 19 per cent). De Beers CEO Al Cook said in February that the company had built up diamond inventories of around $2bn.
Anglo has written down de Beers' book value (principally relating to goodwill) of De Beers by $1.6bn to $7.6bn - or 17 per cent - based on its assessment of global GDP growth and consumer demand and has announced $100m of cuts annually, through job cuts and the sale of peripheral parts of the business.
Pic courtesy De Beers shows Venetia mine.