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De Beers rough diamond production down 13%, sales decline 8% in 2019

Anglo American releasing its production update for the three months ended December 31, 2019, said that De Beers reported a 13% drop in rough diamond production and an 8% drop in sales during the full year.

De Beers rough diamond production for the year stood at 30.8 million carats (2018: 35.3 mn cts).

During the year, the decline in production for Botswana was 4%; for Namibia 15%; for South Africa 59%; and for Canada 13%, the company reported.

The overall drop in production during Q4 was higher than the yearly figure. Production fell by 15% to 7.8 mn cts (Q4 2018: 9.1 mn cts), De Beers said, driven by lower production levels in South Africa and Botswana. While trading conditions have improved since Q3 2019, production was reduced in response to softer rough diamond demand conditions experienced in the year, it added.

Giving details of Q4 production in each country in which it operates, De Beers said: Botswana production decreased by seven per cent to 5.9 million carats. Orapa production decreased by 29 per cent, caused by a delay in an infrastructure project and expected lower grades. This was partially offset by a 21 per cent increase at Jwaneng, driven by planned increases in both tonnes treated and grade.

Namibia production decreased by 10 cent to 0.5 million carats, driven by Debmarine Namibia where production decreased by nine per cent to 0.4 million carats due to routine vessel maintenance in Q4 2019.

South Africa production decreased by 65 per cent to 0.4 million carats due to lower volumes of ore mined at Venetia as it approaches the transition from open pit to underground. In addition, Voorspoed production ended in Q4 2018 when it was placed onto care and maintenance in preparation for closure.

Canada production decreased by three per cent to 1.0 million carats, primarily due to the closure of Victor, which reached the end of its life in Q2 2019. Gahcho Kué production increased by 28 per cent to 1.0 million carats due to strong plant performance.

Overall sales in 2019 dipped to 30.9 mn cts (2018: 33.7 mn cts). During the year, overall demand for rough diamonds was lower as a result of challenges in the midstream, with higher polished inventories and caution due to macro-economic uncertainty.

The full year consolidated average realised price of $137/ct was lower (2018: $171/ct), due primarily to a higher proportion of lower value rough diamonds sold in 2019 and a six per cent lower rough diamond index, the company said.

Speaking about the diamond business of Anglo American, Mark Cutifani, Chief Executive, said: “(There was) …the anticipated lower production from De Beers as Venetia transitions to underground in South Africa and Victor reached the end of its mine life in Canada.”

Production guidance for 20201 is unchanged at 32-34 million carats, subject to trading conditions. The higher production anticipates an improvement in trading conditions compared with 2019, and is driven by an expected increase in production from Venetia.

Courtesy - GJEPC

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