20 Sep 2019
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De Beers: Shrinking Production (By M.D. Dewani)
De Beers’ production of rough diamonds continues to shrink. It may drop this year, even below the previous year’s substantially reduced level, which was already far below its pre-crisis performance. The chances of De Beers attaining pre-crisis level of production in near future are nowhere in sight
By: Diamond World News Service
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Oct 22 2012 12:44PM
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Reference: 7343  

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Downward Trend: It becomes clear at once, if one looks at its production trend for the first-half of 2012. De Beers mines for diamonds at three locations, namely Botswana, Namibia and Canada. While it was able to improve its production in Namibia in the first-half of 2012, at other locations, its output suffered a set-back.

Estimates:

These figures reveal that De Beers’ production of rough diamonds fall in the first half of 2012 to about 13.45 million carats, from nearly 15.53 million carats in the same period of the earlier year. Even if De Beers is able to maintain this production rate in the second half of 2012, which seems unlikely, its total production can reach the level of about 26.90 million carats in 2012, against about 31.3 million carats in 2011.

Slowing Demand for Rough:
This is because the global demand for rough diamonds has been slowing down, almost since the last quarter of 2011. De Beers’ current operations, therefore, continue to focus on maintenance and waste-stripping back logs. This strategy is expected to enable De Beers to meet the present reduced Sightholder demand for rough diamonds, while gradually positioning the mines to future increases in demand.

Jewellery Fairs:
Looking to the lack-lustre response to some of the recent international jewellery fairs, the chances of any significant improvement in the demand for diamonds in near future appear far from satisfactory. While these fair were able to attract enough number of hopeful participants, there was apparent dearth of serious buyers, as a result, these fairs disappointed a number of participants. Sentiment in both the manufacturing and trading centres are affected by the challenging macro-economic conditions, tight money conditions and slowdown in demand.

It is no surprise if De Beers’ production and sales of rough diamonds have been slowing down. A large number of manufacturing units in the second and third tier cities of India, have been forced to roll down their shutters in view of demand slowdown, while many of them even in the major manufacturing centre like Surat are operating at drastically reduced level, as they are already have substantial inventories and their liquidity has been locked up in stocks. Every one, of course hopes for an improvement in demand, but no one is in a position to predict when this will happen.

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