De Beers’ Rough Production Falls
De Beers reported a decline in rough-diamond production in the first quarter while maintaining its full-year guidance as demand recovered to pre-pandemic levels.
Operational challenges drove a 7% year-on-year slump in output to 7.2 million carats, De Beers’ parent company Anglo American said Thursday. Declines in Botswana, Namibia and Canada outweighed a strong recovery in South African production.
Botswana, which accounted for more than two-thirds of total production in the quarter ending March 31, saw rough production plunge by 12% to 5 million carats. Heavy rainfall and operational issues such as continued power-supply disruptions took out almost a quarter of production at the Orapa site, the world’s largest open-pit diamond mine, the company said.
While output from the company’s South African mines increased 55% to 1.2 million carats, Namibia saw a drop of 34% to 338,000 carats due in part to maintenance. Canada was down 16% at 710,000 carats following a coronavirus-related suspension of operations in February. South Africa is the company’s second-largest source of rough diamonds.
Still, Anglo American’s production guidance for this year remained unchanged at 32 million to 34 million carats. In late January, De Beers cut its 2021 outlook for the second time, reducing it from a previous estimate of 33 million to 35 million carats because of operational issues at its mines.
The decision to maintain the forecast followed strong demand in the first quarter. Rough-diamond sales totaled 13.5 million carats from three sights in the first quarter, compared with 8.9 million carats from two sights a year ago and 6.9 million carats from two sights in the last three months of 2020.
The recovery reflects the “replenishment of the depleted midstream and renewed confidence by the midstream in response to the return of consumer demand for diamond jewelry in the US and China in the second half of 2020,” Anglo American added.
De Beers’ third sight of the year, which began in late March, extended beyond the normal weeklong duration because of travel restrictions. As a result, the miner will recognize 200,000 carats of sales from that trading session in the second quarter, it noted.