As the diamond market continues to struggle with high inventories and low demand, Anglo American is considering further cuts to production at its subsidiary De Beers.
The diamond giant has already chopped production plans by three million carats for 2024, confirming in July that output guidance was reduced to 23-26 million from the original estimate of 26-29 million.
Production for the third quarter of the year (July – September) was down 25 percent from the previous quarter (April – June), with 5.6 million carats produced compared to 7.4 million.
This comes hot on the heels of Debswana, which is equally owned by De beers and Botswana government, announcing a halt in recruitment, except for positions deemed critical to safety and production.
Other cost containment measures include: no purchase of branded corporate wear, a total freeze on travel requests and no purchases of food for meetings.
According to Debswana, this was deemed necessary with immediate effect due to subdued markets and their depleted cash balance.
Botswana bore the brunt of De beers’ cutbacks, with production dipping by 32 percent to 4 million carats as output from the Jwaneng mine was reduced.
Namibian production dropped by 14 percent to 0.5m carats with cutbacks at Debmarine but South African production rose 41 percent to 0.5m carats as the Venetia underground mine ramped up operations.
Production in Canada decreased by 11 percent to 0.6 million carats due to the planned treatment of lower grade ore.
Confirming the likelihood of more cuts, Anglo Chief Executive Officer (CEO), Duncan Wanblad said, “The diamond market remains challenging as the midstream continues to hold higher than normal levels of inventory and the expectation remains for a protracted recovery. As a result, together with our partners, we will continue to assess the options to reduce production going forward.”
Wanblad added Anglo are still intent on selling De Beers by the end of next year, but are also seriously considering the option of a ‘spin-off’ (when a parent corporation separates part of its business operations into a second publicly traded entity).
Indicative of the dwindling demand for diamonds, De Beers combined its seventh and eight sights of the year, generating $213 million from the sale of 2.1 million carats.
This is way less than the $899 million raised over the same three-month period last year (from 7.4 million carats) and is also significantly down from the $1, 039 million raked in (from 7.8 million carats) during the second quarter of 2024.
