Hoping to play a role: Bruce Cleaver, CEO of De Beers. Picture: REUTERS
Hoping to play a role: Bruce Cleaver, CEO of De Beers. Picture: REUTERS

De Beers, the largest producer of rough diamonds by value, reported its lowest first sales in at least four years after a strong finish to 2018.

De Beers reported sales of $505m for its first sales of 2019, the lowest since the Anglo American 85% held subsidiary started releasing its sales data in 2016.

In 2018, De Beers reported sales of $672m in the first event of the year, while the previous lowest total was $545m in 2016.

“Rough diamond sales during the first sales cycle of 2019 were lower than those for the equivalent period last year, reflecting higher than normal sales in the previous cycle and the slow movement of lower value rough diamonds through the pipeline,” said De Beers CEO Bruce Cleaver.

The difficulties around the demand for lower value rough diamonds, which are the small stones making up the bulk of diamond mining production, have continued from the previous year when Cleaver flagged slowing purchases by Indian cutters and polishers who specialise in processing small stones.

De Beers reported full-year production of 35.3-million carats for 2018, a 6% increase on the previous year. Sales, however, did not match production, falling by 4% compared to the year before to 33.7-million carats.

The average price of those sales increased by 6% to $171/carat because of the reduced sales in the second half of the year of the lower value diamonds which would have brought the average down.

Based on the sales data from De Beers for its 10 sales events in 2018, the company realised revenue from its rough diamond sales of $5.391bn.

Russia’s Alrosa, the world’s largest diamond producer, noted a week ago its 2018 sales were $4.5bn, a 6% improvement on the previous year, while sales of 38-million carats were down by 8%. The company produced 36.7-million carats.

“In most of South Eastern Asia, including India, the diamond jewellery sales growth slowed down, with some countries showing a decline triggered by devaluation of local currencies against the dollar,” Alrosa said in a market update on January 24.

“Demand for rough diamonds echoed the situation on the polished diamond market, where uncertified melee diamonds [that weigh less than 0.15 carats] saw the strongest price decline due to over-supply, the weak rupee and lower liquidity in India.” 

SeccombeA@businesslive.co.za