De Beers’ optimism grows but Delta variant poses risks
De Beers’ rough diamond sales reached $2.6 billion (P28.5 billion) in the first six months of the year, more than one and a half times the level in 2020. This was helped by resurgent demand in the United States and China, but the diamond giant is keeping a cautious outlook on the year.
De Beers, which equally co-owns Debswana with the Government of Botswana, is closely monitoring the resurgence of COVID-19 cases in the key consumer markets of the US, China and India, where the Delta variant is driving new infections.
The US, where at least 70% of adults have received one dose of COVID-19 vaccines, has seen a sharp uptick in cases recently due to the highly transmissible Delta variant, while China, which had contained the virus, this week reported a fresh outbreak in Wuhan Province, ordering the blanket testing of residents.
“We remain cautiously optimistic for the second half of the year,” Paul Rowley, De Beers’ executive vice-president, Diamond Trading, told media last
Thursday. “We can get excited by the numbers we are seeing now but the situation is very changeable.
“The strong recovery in consumer demand is expected to continue as economies continue opening up due to expectations of vaccinations.”
De Beers, which has mines in Botswana, South Africa, Namibia and Canada, sold about 19.2 million carats in the first half of the year, up 124% year on year, helped by a recovery in key consumer markets where COVID-19 had restricted sales and demand in 2020. The US and China alone accounted for 68% of De Beers’ consumer demand in the first half of the year, while India, another key market, struggled with the world’s worst COVID-19 infections in March driven by the Delta variant. Rowley, however, noted that India, which is crucial for the diamond midstream of manufacturers, had since been improving.
“The diamond industry’s fundamentals are in a very strong position,” he said. The threat of Delta also stretches to De Beers’ mines, where Botswana and Namibia have been experiencing some of the world’s highest COVID-19 infection rates in recent weeks. South Africa, another producer in the De Beers’ stable of mines, recently came off the peak of its third wave, although deaths are still at high levels.
Rowley told BusinessWeek the high cases in the region were part of the reason De Beers had limited its production guidance for 2021 to under 33 million carats, despite the broader expectations of recovery. Alessandra Berridge, De Beers’ executive vice-president, Commercial and Partnerships, told BusinessWeek the diamond giant was keenly monitoring the risk posed by rising cases in Botswana and other countries. She said key interventions were being taken in partnership with the government.
“We are concerned about the continuing impact of COVID-19 on our workers and operations,” she said.
“We have all our protocols in place and all of us agree that the rollout of vaccines is of primary importance. “We continue to focus on these discussions with the government.”
De Beers recently provided P55 million to help government’s vaccination acquisition and rollout programme. In the first six months of the year, Botswana contributed about 70% to De Beers’ overall production of 15.4 million carats.