De Beers tops 2017 full-year sales after a strong end to 2018: Bruce Cleaver, CEO of De Beers. Picture: REUTERS
De Beers tops 2017 full-year sales after a strong end to 2018: Bruce Cleaver, CEO of De Beers. Picture: REUTERS

De Beers recorded $540m of rough diamond revenue in its 10th and final sales event of 2018, the highest in three years, pushing total revenue past the previous year’s level.

De Beers, which has mines in Botswana, SA, Namibia and Canada, notched up full-year sales of $5.387bn, using the provisional figure of $540m for the sales achieved by December 17, including auctions and the big set piece event called a “sight” in Gaborone attended by about 80 hand-picked clients.

In the previous two years, De Beers achieved sales in the 10th cycle of $455m and $422m for 2017 and 2016, respectively, delivering totals of $5.311bn and $5.587bn.

“De Beers Group’s rough diamond sales during the final cycle of the year continued to be in line with expectation ahead of the all-important retail selling season as cutting and polishing factories in India restarted their operations following the Diwali holiday,” said De Beers CEO Bruce Cleaver in the only comment accompanying the sales data.

Cleaver had flagged slow demand for smaller diamonds from India as a cause for concern in the run up to the end of the year.

Mark Cutifani, CEO of Anglo American, which owns 85% of De Beers, said on a December 11 call with analysts that the market for smaller diamonds remains difficult. “We are also watching the market and, in particular, the small sized diamonds which seems to be a little over supplied recently.” 

De Beers, which is the world’s largest rough diamond producer by value and second in production to Russia’s Alrosa, surprised the market this month with its production forecasts for the next three years.

De Beers is forecast to push output up to 37-million carats by 2021, a target that depends on demand, but it is a number that exceeds its production forecast for 2018 of between 35-million and 36-million carats, which will be a decade high since the start of the global financial crisis in 2008.

The increased production in three years’ time includes the output from SA’s Venetia mine where De Beers is spending $2bn to switch to an underground mine from an opencast mine. Venetia is the last De Beers mine in SA, with the company closing and selling a large number of mines over the past decade.

“On diamonds, we expect the market will improve a bit by 2020-2021,” Cutifani said. “We don’t want to add to that volume, that’s why we’re not really pushing our own volumes beyond what we’re showing in the guidance,” he said, referring to lower-value, smaller diamonds.

“We expect better pricing on the higher quality products where the bulk — about 70% — of our revenues come. That’s the more important end of the market for us, but we’ll continue to manage volumes in the lower end.” 

seccombea@businesslive.co.za