De Beers has published its financial results for the first half of 2023 (ended June 30, 2023), reporting rough diamond sales of $2.5 billion (compared to $3.3 billion in H1 2022).
According to the report, demand for rough diamonds was impacted by “high levels of polished diamond inventory in the midstream coming into 2023, as well as the ongoing macroeconomic headwinds”. In an interview with Mining Weekly, De Beers Group CFO Sarah Kuijlaars addressed this “headwinds” comment, explaining: “The macroeconomic conditions have been tougher than we would like. It’s easy to forget, but 2021/2022 were outstanding for the diamond industry, and we’ve come off that a bit. You’ll recall there was fiscal stimulus in the US and as that’s unwound, it has provided softer conditions in the diamond market.”
She then added: “India demand has been strong and then if you look across to China, where we all hoped for the pent-up demand to come through, as it had in the US, that’s been a bit slower than we expected, so overall tough macro environments for us in the first half.”
Kuijlaars stressed the company’s confidence in the “long-term supply/demand fundamentals,” saying: “We know demand is going to grow. We know more middle-class income people are going to aspire to buy diamonds, and supply is going to support that demand growth in the longer term.”
Back to the De Beers financial report: Rough diamond production was “broadly flat,” compared to a strong first half of 2022, at 16.5 million carats (a drop when compared to the 16.9 million carats De Beers produced in H1 2022). In Botswana, production increased 9% to 12.7 million carats, while Namibia production increased 21% to 1.2 million carats. South Africa production decreased 59% to 1.2 million carats (30 June 2022: 2.9 million carats), “due to the planned completion of the Venetia open pit in December 2022,” while production in Canada increased 9% to 1.4 million carats.
Total revenue decreased to $2.8 billion (from $3.6 billion in H1 2022), with rough diamond sales decreasing to $2.5 billion (from $3.3 billion in H1 2022) “reflecting the softening in demand.” Total rough diamond sales volumes of 15.3 million carats were in line with H1 2022 figures. The average realized price per carat fell 23% to $163/ct (from $213/ct in H1 2022), reflecting “the more cautious approach Sightholders took to planning their 2023 allocation schedule due to the uncertain macroeconomic outlook.”
Underlying EBITDA fell 63% to $347 million, driven by the lower average realized price and higher unit costs.
De Beers added that macroeconomic conditions “are expected to remain challenging over the near term, impacting consumer spending on diamond jewelry.”
When commenting on the newly signed deal with Botswana, Kuijlaars said to Mining Weekly that the 25-year Debswana mining license is important to De Beers because it secures the company’s access “to real tier-one assets, some of the best diamond mines in the world […]”.
Regarding the Diamonds for Development Fund, and the benefits that will accrue to the people of Botswana from De Beers’ initial $75-million, one billion pula, investment, Kuijlaars reminded that the fund will run independent of De Beers and will have independent governance, and that “the fund’s website is open for Batswanans to begin expressing their interest and for the fund to then decide how it will invest in the future of Botswana.”
Read the full interview here.
