De Beers has recently reported its preliminary financial performance for 2023, noting a substantial 36% decrease in revenue for the year – plummeting from $6.6 billion to $4.3 billion. According to a report in IDEX Online, the company attributed this decline to a surge in polished diamond inventories, escalating inflation and interest rates, macro-economic hurdles, and the increasing supply of lab-grown diamonds.
The UK-based mining company acknowledged the persistently challenging industry conditions in the short term. However, it expressed optimism about the long-term outlook, saying: “Over the course of 2024, assuming a measured approach from producers to the release of upstream inventory, the high midstream inventory levels seen in 2023 are expected to decline as retailers replenish their stocks […] Limited consumer demand growth and ongoing retailer caution are anticipated ahead of an expected return to growth into 2025.”
The company reported an 8% year-on-year reduction in total production across its mines in Botswana, Namibia, South Africa, and Canada, amounting to 31.9 million carats. Rough diamond sales also declined by 19%, totaling 24.7 million carats, with the average price per carat dropping by 25% from $197 to $147.
In related news, Anglo American, the miner’s parent company, has reportedly devalued De Beers by $1.6 billion, marking a 17% reduction, as dwindling demand continues to exert downward pressure on diamond prices. The revised valuation places the miner at $7.6 billion. Anglo American holds an 85% stake in De Beers, while the government of Botswana owns the remaining share.
According to IDEX Online, Duncan Wanblad, CEO of Anglo American, told South Africa’s Primedia: “Our updated assessment of global GDP growth and consumer demand were the main factors behind our $1.6 billion write-down of our book value of De Beers, principally relating to goodwill. De Beers is absolutely at the bottom of a cycle and we’ve seen it before… and there’s no doubt that as the world’s GDP comes under pressure then the diamond business really does take the brunt, but it is cyclical. What we do know is that there’s a return from these sorts of cycles… and in the world of natural diamonds there are very few assets, the quality of those that exist within De Beers today.”
In more less than stellar news for De Beers, Debswana Diamond Company has reported a notable 25.1% drop in rough diamond sales for 2023, according to data released by Botswana’s central bank and quoted by Mining Weekly. The decline is attributed to an economic deceleration impacting luxury demand in key markets such as the US and China, coupled with heightened competition from lab-grown gems.
Debswana, jointly owned by Botswana and Anglo American’s De Beers, allocates 75% of its output to De Beers, while the remaining share is acquired by the state-owned Okavango Diamond Company (ODC).
