Rough diamond sales dip to their lowest sale cycle since 2015

DE BEERS, the world’s biggest diamond producer by value, said yesterday that rough diamond sales for its eighth sight sales cycle of 2017 had dipped to $370 million (R4.9 billion).

This was the lowest sales cycle since December 2015 and represented a 25 percent decline year-on-year. De Beers chief executive Bruce Cleaver said yesterday that the $370m worth of rough diamond sales was line with expectations.

“De Beers offered fewer rough diamonds for sale in Cycle 8, reflecting the concurrent timing this year of the sight sale, with the closure of polishing factories in India and Israel for the observance of religious holidays,” Cleaver said.

De Beers, which is 85 percent owned by global diversified company, Anglo American, and the remaining 15 percent was owned by the Botswana government.

It previously reported it had sold $507m worth of rough diamond for the seventh cycle of 2017 and $494m worth of sales for the eighth sales cycle of 2016. De Beers has 10 sale cycles each year. The last two sights had been significantly smaller than a year ago.

Cleaver previously also said that the seventh cycle numbers were in line with expectations. He said last month that some midstream demand had already been brought forward into Cycle 6 due to Diwali being earlier than normal in 2017.

Myles Allsop, an analyst at UBS, said yesterday that Anglo cash flow was attractive, but vulnerable to spot price correction. “We see Anglo as a play on equity accretion with South African politics and the diamond/ platinum group metals outlook headwinds near term,” he said.

He also said the sales for De Beers competitor Alrosa had declined by 4 percent in the year to date, slightly weaker than the UBS forecast.

Allsop said with its first six months of 2017 results, Anglo maintained 2017 production guidance at between 31 and 33 million carats or between 3 and 10 percent higher year-onyear, which implies broadly flat production in the second half of between 14.9 million and 16.9 million carats.

De Beers had the capacity to produce between 36 million and 38 million carats. It does, however, manage the business to maintain a 35 percent market share of rough, said Allsop. He also said that De Beers saw the opportunity to grow with emerging markets middle class

De Beers operates the Jwaneg diamond mine in Botswana, the richest diamond mine in the world.

In South Africa De Beers is investing $2bn in converting the Venetia open pit mine into an underground operation. The investment was expected to extend production at the site to 2043, with the potential to deliver an estimated 96 million carats.

It was previously reported that the De Beers group brought the Gahcho Kue diamond mine on stream in Canada, and it had put another diamond-mining ship in the sea off the coast of Namibia.