De Beers reports fall in second sale

De Beers, the world’s largest producer of rough diamonds by value, reported a fall in the second sale of the year to $545m. De Beers reported $729m for the first sale of the year, one generally buoyed by cutters and polishers to replenish stocks after year-end sales.

De Beers, the world’s largest producer of rough diamonds by value, reported a fall in the second sale of the year to $545m.

De Beers reported $729m for the first sale of the year, one generally buoyed by cutters and polishers to replenish stocks after year-end sales.

A year ago the second sale earned $617m.

The year-to-date revenue from the two sales represented a quarter of JP Morgan Cazenove’s full-year sales forecast, said analyst Fraser Jamieson. The first two sales of last year represented 21% of the full-year figure for 2016.

“We continued to see good demand across our product range in the second sales cycle, which was in line with expectations at this time of year.

“Sentiment remains positive,” De Beers CEO Bruce Cleaver said on Tuesday. De Beers would produce 31-million to 33million carats this year compared with 27.3-million carats in 2016. This year’s production forecast will bring the company to the level of 2014, when it produced 32.6-million carats.

De Beers reported a 30% jump in total revenue for 2016 to $6.1bn as rough diamond sales shot up 37% to $5.6bn, with De Beers mopping up much of the 6-million carats of inventory left behind in a very difficult 2015. The bulk of the inventory was in Debswana, the joint venture with the Botswana government.

Inventories in De Beers had returned to normal levels of a “sight and a half” worth of diamonds, Cleaver said in an recent interview.

A sight is one of 10 sales events in a year when 80 clients visit the De Beers offices in Gaborone to buy diamonds.

“Debswana has no excess inventory at this point. Nowhere in the De Beers group is there any excess inventory anywhere, which is good,” Cleaver said.