De Beers Q2 Production -54% to 3.5 Million Carats


Covid-19 precautionary measures being taken at the Venetia min

De Beers reported that its rough diamond production for Q2 that ended 30th June, 2020 decreased by 54% to 3.5 million carats, primarily due to the Covid-19 lockdowns in southern Africa.

Mining operations resumed following regional lockdowns with Covid-19 measures in place to safeguard the workforce; with production at lower levels reflecting reduced demand for rough diamonds due to the pandemic.

In Botswana, production decreased by 68% to 1.8 million carats, principally due to a nationwide lockdown from 2nd April to 18th May and the implementation of Covid-19 measures to safeguard the workforce. Operations restarted from mid-May, with production targeted at levels to meet the lower demand.

Namibia production increased by 7% to 0.4 million carats as the Mafuta crawler vessel was under planned maintenance in Q2 2019. With targeted regional lockdowns in Namibia in response to Covid-19, marine operations implemented measures to enable operational continuity while safeguarding the workforce. This more than offset the decrease in production from Covid-19 at the land operations.

South African production decreased by 3% to 0.6 million carats primarily due to Covid-19 measures. The production shutdown was partly offset by higher grades from the open pit material prior to transition to the underground.

Production in Canada decreased by 27% to 0.8 million carats, primarily due to Victor reaching the end of its life in Q2 2019. At Gahcho Kué, production decreased by 11% to 0.8 million carats due to Covid-19 measures.

De Beers noted that during Q2, the demand for rough diamonds was significantly impacted by a combination of Covid-19 restrictions impacting consumer demand and access to southern Africa, as well as severely limited midstream cutting and polishing capacity due to lockdowns, particularly in India.

Rough diamond sales totalled 0.3 million carats (0.2 million carats on a consolidated basis) compared with 9.0 million carats (8.3 million carats on a consolidated basis) in Q2 2019. The third Sight of 2020 was cancelled due to Covid-19-related travel restrictions and, in response to the unprecedented industry conditions, De Beers also offered Sightholders the option to defer up to 100% of their allocations at the fourth and fifth Sights. Rough diamond consolidated sales in Q2 2020 decreased to $56 million (Q2 2019: $1.3 billion), driven by lower volumes and prices.

The H1 2020 average realised rough diamond price decreased by 21% to $119/carat (H1 2019: $151/carat), driven by a higher proportion of lower value rough diamonds sold and an 8% reduction in the average rough price index.

De Beers left its full-year production guidance unchanged at 25-27 million carats (100% basis), subject to continuous review based on the disruptions related to Covid-19 as well as the timing and scale of the recovery in demand.

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