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De Beers’ Q2 diamond production drops 5% to 7.6 mn ct

Diamond mining giant De Beers has released its production report for the second quarter of 2023, revealing some significant changes in diamond output across its operations. Its total rough diamond production for the quarter decreased by 5% to 7.6 million carats compared to the same period in 2022. De Beers attributed this decline to the planned reduction in production at the South African operations as the Venetia open pit transitions to underground operations. However, the decrease was partially offset by strong performance due to the planned treatment of higher-grade ore at other assets.

In Botswana, production increased by 6% to 5.8 million carats, driven by the planned treatment of higher-grade ore at the Orapa mine. However, this growth was partly hindered by lower throughput at the Jwaneng mine, which underwent planned maintenance during the quarter. Namibia experienced an 8% increase in production to 0.6 million carats, primarily due to the ongoing ramp-up and expansion of the mining area at the land operations.

In contrast, South Africa saw a significant 62% decrease in production to 0.5 million carats. This decrease was expected, as De Beers had planned to end the open pit operations at the Venetia mine in December 2022. The mine is currently processing lower-grade surface stockpiles as it transitions to underground operations, resulting in temporary lower production levels. Production in Canada increased by 6% to 0.7 million carats, driven by the treatment of higher-grade ore despite planned maintenance at certain plants.

The diamond market faced challenges during the Q2, impacted by ongoing macro-economic headwinds and high levels of polished diamond inventory in the midstream. Rough diamond sales totalled 7.6 million carats (6.4 million carats on a consolidated basis) from two Sights, compared to 9.4 million carats (8.3 million carats on a consolidated basis) from three Sights in Q2 2022 and 9.7 million carats (8.9 million carats on a consolidated basis) from three Sights in Q1 2023.

The average realized price for rough diamonds decreased by 23% to $163/ct in the first half of 2023, compared to $213/ct in the same period in 2022. This decline was mainly due to a larger proportion of lower-value rough diamonds being sold, as Sightholders adopted a cautious approach amidst the uncertain macro-economic outlook. Additionally, a softening in consumer demand for diamond jewellery and a build-up of inventory in the midstream contributed to the overall decrease in the average rough price index, which fell by 2%.

Looking ahead, De Beers maintains its production guidance for 2023 at 30-33 million carats (100% basis), subject to trading conditions. The company also revised its unit cost guidance for 2023 to approximately $75/carat (previously approximately $80/carat) due to the weaker South African rand.

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