De Beers expects 26 to 28 million carats diamond output in 2016

De Beers, the diamond major is feeling the heat and going to slash its exploration budget for 2015-16 substantially, besides viewing the whole crisis as that of stock crisis. As Philippe Mellier, De Beers chief executive officer, in a presentation to Anglo American analysts, says, “The crisis is not a demand crisis, it’s a stock crisis. We are mindful that the midstream has to generate profit.” Nonetheless, Mellier pointed out that De Beers helped open up profit for manufacturers by reducing rough prices by more than polished. De Beers reported that rough prices declined 15 per cent in 2015, while it estimated that polished prices fell 8 per cent. 

It may be recalled that De Beers has slashed its costs of production from $111 per carat in 2014 to $101 per carat in 2016. Employee numbers will fall significantly, with more than 1,500 job losses across its Canada, South Africa and the industrial diamond Element Six operations. The Element Six plant in Sweden will be closed and its South African plant restructured. In addition, between 2015 and 2017 De Beers capital expenditure is expected to drop by around $200 million to $500 million, mainly as it completes its Gahcho Kue mine development in Canada.